The Irish Times view on the UK budget: grasping for growth

The odds were always stacked against John Healey announcing any radical measures in his first budget as UK chancellor of the exchequer. His room for manoeuvre is limited by mountainous debt levels and anaemic growth. And so it turned out. The bond markets took a mildly benign view of a package of tax increases on banks, the gambling sector and property which will fund additional social spending to tackle the cost of living crisis. What is striking about the budget is what it failed to say.

There was no statement of intent from Andy Burnham, the newish prime minister, about the direction he would like to take the country. Two big-ticket items were fudged. Perhaps mindful that proposed welfare reforms dealt the first crippling blow to Keir Starmer’s premiership, Healey announced that plans to reduce spending would be unveiled in 2027. There was a commitment in the budget to increase defence expenditure to 3 per cent of GDP by 2030, but, again, it will be 2027 before details of how this will be achieved are released.

Meanwhile, the Office for Budgetary Responsibility downgraded the UK’s growth forecast for next year to 1.1 per cent due to the Gulf war. The reality is that the UK has been caught in a low-growth doom loop for the past decade. The national debt is hovering at £3 trillion, or 95 per cent of GDP. The interest rate on 10-year government bonds is 5.25 per cent, higher than Greece. Healey announced a series of measures, including tax breaks for female founders and more fiscal autonomy for the regions, but in reality these will have a marginal effect on growth.

A decade after the Brexit referendum, successive governments have failed to outline a convincing growth strategy. And while the Tories shout betrayal about Burnham’s wish to forge closer ties with the EU, or even possibly rejoining, it was clear from their post-budget reaction that they are no closer to solving the UK’s post-Brexit growth conundrum than they were a decade ago.