John Healey, the UK's Chancellor of the Exchequer, used a scheduled speech during Monday's European trading session to make clear that his government has no intention of loosening its grip on the public purse, even as the cost of government borrowing sits at levels not seen in years.
Global shocks meet record borrowing costs
Healey said global shocks are being felt keenly in the UK right now, and pointed out that the country's borrowing costs are currently at a historic high, meaning it now costs the government noticeably more to raise the debt it needs. He argued the picture is not entirely bleak, though: growth remains fragile, but the UK was the fastest growing economy in the G7 during the first half of 2026, and productivity, which has lagged for years, is finally starting to pick up.
Healey said he wants to draw a line under the rising costs running through the economy. In practice, that signals reining in spending and stabilising the government's finances is now his central task, even if it means unpopular choices along the way.
Building on Reeves' fiscal discipline, a devolution roadmap at the budget
Healey framed his own approach as an extension of a fiscal discipline drive already begun by Reeves, telling the audience he intends to build on that work rather than start from scratch. He added that at the upcoming budget he will lay out a roadmap for fiscal devolution, essentially a plan to hand more financial decision-making power to regions. He did not use the speech to detail what powers or funding arrangements that roadmap will eventually cover, leaving the specifics for the budget itself.
AI opportunity, but not without oversight
Healey also used the speech to address artificial intelligence. "I will not let opportunity of AI to pass by, but will not allow it to proliferate without oversight," he said. He added that the UK needs to face up to the risks AI poses around national security, signalling the government intends to pair support for the technology with closer scrutiny of it. Healey said he shares the concerns many people have about AI technology, adding that it will change the labour market in ways that not even economists fully understand.
What the speech signals
Taken together, Healey's remarks paint a picture of a government trying to hold two things in balance at once: keeping a tight lid on borrowing and spending while insisting that growth and productivity gains are still happening. By pairing warnings about historic borrowing costs and national security risks from AI with a promise of a fiscal devolution roadmap at the budget, Healey signalled that the next budget will be watched closely for how far the government is willing to go on both discipline and reform.
