Healey urged to strengthen public finances and shrink the state
The article argues that Chancellor John Healey should use the Budget to strengthen Britain’s finances and reduce the size of the state, rather than rely on better growth forecasts and previously announced tax rises. It warns that global economic and political shocks could expose weaknesses in the public finances and trigger turmoil in currency and bond markets.
The writer cites Britain’s 1.3 per cent growth alongside stagnation in Germany, France and Italy, and recalls how shocks in 1967 preceded a 14 per cent devaluation of the pound and the resignation of Chancellor James Callaghan. The proposed response is to freeze public sector pay and benefits, while the article also discusses HSBC’s £7.2 billion quarterly pre-tax profit and its 5.4 per cent share-price fall.
In short
- The article urges Healey to strengthen the UK’s financial defences.
- It proposes freezing public sector pay and government benefits.
- It warns that global shocks could threaten markets and public finances.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of reducing the state argue that Britain’s public finances need a stronger buffer against unpredictable shocks, and that relying on improved growth forecasts or tax rises may leave the country exposed. Freezing public sector pay and benefits could curb spending and reassure investors that the government is prepared to act, while the 1967 crisis illustrates how quickly confidence can deteriorate.
The case against
Critics argue that freezing public sector pay and benefits would make workers and households bear the cost of fiscal caution, potentially weakening living standards and demand. They may favour protecting public services and incomes while addressing the finances through stronger growth, carefully targeted revenue measures or other spending choices, and caution that one historical crisis does not establish that the same response is needed now.
Explained simply
The chancellor is the government minister responsible for taxes, public spending and borrowing, and the Budget sets out the government’s financial plans. Britain’s public finances are the money raised through taxes and other income, and the money spent on services, benefits and debt interest.
The state’s size refers broadly to how much the government spends and how many services and responsibilities it funds. Public sector pay covers employees working for government and publicly funded services, while benefits provide financial support to eligible people; changes to either can affect household incomes and public services.
The pound’s value and the cost of government borrowing can shift when investors react to economic or political uncertainty. HSBC is a major international bank, and its results and share price are often watched as indicators of how financial markets are responding to business conditions.
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Originally published by Daily Mail as “It’s time to build the UK’s financial defences and slash the size of the state, says ALEX BRUMMER”.