The chancellor is set to give an upbeat view of the state of the UK economy ahead of next month’s Budget, building on a recent uptick in consumer and business confidence.
In a speech on Monday in Coventry, John Healey will talk of a “new story” of the economy not just turning a corner but being resilient, optimistic and “ready to seize the opportunities of new technologies and ideas”.
But nearby, Jaguar Land Rover is planning to cut thousands of jobs to save costs following competition from China for cheap cars, US tariffs on UK vehicles and the after effects of a cyber attack.
Healey is also facing concerns about government borrowing costs and the inflationary impact of the Iran war.
In his speech, Healey will unveil a £150m fund for companies in the north of England, which is part of a wider plan to generate more economic growth around the UK.
The Conservatives said Healey’s plans would “do little to comfort hard-working families and businesses”.
Healey will detail plans to use public investment to “unlock private investment, to support our innovation economy, and to create the new jobs their areas need”.
The fund, from money already allocated to the British Business Bank, will provide investments of between £5m and £15m to the “most innovative and fast-growing firms”.
It is expected to back university spin-outs and other “ambitious businesses” across the north.
Describing a country “turning the corner”, the chancellor is expected to say: “The prime minister laid out a clear diagnosis of what has gone wrong in the past. The solution is a fundamental shift that starts with putting power in the right places.
“The next chapter of Britain’s growth story will be written in more places.”
Recent ructions in government debt markets have made constrained public finances worse, with the Treasury needing to fill possible multi-billion pound gaps caused by rising borrowing costs, and the need to fund higher defence spending.
As he prepares to deliver his Budget on 28 October, the chancellor has said he is as committed to balancing the books as his predecessor, Rachel Reeves.
But the tone matters. To get high saving consumers spending, and cautious businesses investing, Downing Street wants to point to sunnier times ahead for now, more than the prospect of tough Budgetary medicine.
It would also contrast with former Prime Minister Sir Keir Starmer, who was accused of talking down the UK economy after Labour won the election when he warned the government would have to make “difficult decisions” to boost growth and “fix” the country’s finances.
Helen Miller, director of the Institute for Fiscal Studies, said: “Economic growth in every postcode sounds great and is something we would all love. I think it’ll actually be much harder to achieve in practice.”
She said it would be easier to see how the government could make stronger second and third cities than to see “how it would drive growth in literally every postcode”, as Prime Minister Andy Burnham has promised.
During his first Prime Minister’s Questions on Wednesday, Burnham faced scrutiny over rising UK borrowing costs.
Conservative leader Kemi Badenoch urged him to say how he would deal with the UK’s increasing debt, after the cost of borrowing for the UK reached a new 18-year high.
Burnham blamed the previous Tory administration, and said his government would be “grounded in fiscal responsibility”.
Shadow chancellor Andrew Griffith said Healey’s plan would do “little to comfort hard-working families and businesses across the country who are worried about more tax rises or the fact that government borrowing rates are near a 28-year high”.
He added: “We are facing serious threats from Russia and Iran on our doorstep, as well as threats to the Falkland Islands.
“Yet the chancellor, the man who resigned over defence spending, seemingly does not want to mention our armed forces or how we will reach 3% of GDP on defence.”
Liberal Democrat deputy leader Daisy Cooper said: “Re-announcing £150m across the entire north of England will barely shift the dial on growth.”
Robert Jenrick, Reform UK’s economic spokesman, said: “Days after a market meltdown, when grip and direction are required, John Healey has revealed himself to be an empty vessel with no idea about how to rescue our economy.”
