With the public finances under pressure from soaring long-term bond yields, which hit an 18-year high last week, Healey argued that stronger growth was the most sustainable way to balance the books. However, he also signalled that his budget would require Labour \u201cbeing honest about the need to control government spending\u201d.<\/p>\n
Economists have warned the chancellor could be forced to increase taxes or cut spending in response to rising spending pressures and the economic fallout from the war in Iran<\/a> triggering turmoil in global bond markets.<\/p>\n The UK\u2019s 10-year borrowing costs rose slightly on Monday amid pressure on governments worldwide, as fears over the impact of the war pushed the price of oil closer to $100 a barrel.<\/p>\n Aiming to soothe concerns in a speech to business leaders at a manufacturing centre in Coventry, Healey said Britain was continuing to pay a \u201cTruss penalty\u201d almost four years since the former Conservative prime minister\u2019s ill-fated mini-budget<\/a> triggered a meltdown in the UK government bond market.<\/p>\n With Labour under pressure amid questions over Burnham\u2019s tax and spending priorities and as the UK carmaker Jaguar Land Rover \u2013 headquartered down the road from the venue for his speech \u2013 announced plans to cut 4,000 jobs<\/a>, Healey said maintaining fiscal discipline was important in an uncertain and volatile world.<\/p>\n \u201cIt makes our task in government harder. It makes the task of every business looking to invest much harder, too,\u201d he added.<\/p>\n Healey said he intended to stick to Labour\u2019s manifesto commitments not to raise taxes on working people. Photograph: Betty Laura Zapata\/Reuters<\/p>\n Business groups said they welcomed the chancellor\u2019s pro-growth message, including pledges to devolve tax and spending powers to regional mayors and also his promise to \u201ctake an axe\u201d to regulations he said were holding back business investment.<\/p>\n Louise Hellem, the chief economist at the Confederation of British Industry, said: \u201cFirms will welcome the positive signals of intent from the chancellor and will now be looking ahead to the budget to see whether the government can match its ambition with decisive action to cut business costs and give firms the headroom they need to invest.\u201d<\/p>\n The chancellor\u2019s critics said his speech was light on detail despite the mounting pressure on the economy.<\/p>\n
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