UK Fiscal Update What have we learned so far?

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UK Fiscal Update What have we learned so far?

21 July 2026

UK Fiscal Update Economics

What have we learned so far? United Kingdom

◆ The gilt market seems sanguine about John Healey’s appointment as Elizabeth Martins

Chancellor, and there were no nasty surprises in the June borrowing data SeniorHSBC BankEconomist,plc UK

liz.martins@hsbc.com

◆ But the new PM’s wish list is long, and there is uncertainty over the timing of +44 20 7991 2170

the Budget and, more importantly, its contents EmmaUK EconomistWilks

HSBC Bank plc

◆ Our overall impression is there might need to be some combination of tax emma.wilks@hsbc.com

+44 20 3268 5948

rises, welfare cuts and/or more borrowing in the Autumn Budget

Facts

Yesterday, the UK’s new PM Andy Burnham yesterday appointed his cabinet, including former Defence

Secretary John Healey as Chancellor, and has begun to set out some of his policy ideas.

The news is coming out rapidly, and more is expected, but some of the important developments so far are

as follows:

◆ The PM said in his inaugural speech outside Downing Street that he intended his premiership to be a

“circuit breaker for Britain, bringing forward the biggest changes in the past 40 years — a new political

model and a new economic model”. That seems to mean a policy framework in opposition to what he

sees as the “wrong turns” Britain made in the 1980s: centralisation, privatisation and

deindustrialisation. He said he would set out a 10-year economic plan later this year and ended the

speech by promising that his first “instruction” would be to end rough sleeping in the UK.

◆ He then later told reporters that he would “use obviously any flexibility within” the fiscal rules – a nod

towards potentially more borrowing that led to an unsettled end to the day for the gilt market. We