Budget 2026: The two big calls Chancellor John Healey has to make

In response, the Treasury has pointed to the UK having the highest growth and the fastest falling borrowing of the major G7 countries so far this year and our overall energy prices starting to decouple from high and volatile gas prices.

However, the IMF chief Kristalina Georgieva this week dismissed the idea that advanced nations could pause their fiscal homework, while the Gulf situation calmed.

“Bring debt levels down, make fiscal consolidation as a priority… it is impossible to stress strongly enough how critical it is to get the courage to take the steps that are necessary,” Georgieva told me, acknowledging the UK’s “fairly consistent, credible” plans.

Then there is the curious conundrum of British productivity. Last year, the government’s official forecaster the Office for Budget Responsibility (OBR) downgraded the UK’s productivity peformance, leading to a notable hit to the public finances.

Now the UK’s productivity record has been upgraded materially by the Office for National Statistics, although this is because of fewer hours worked. There could therefore be an argument to reverse some of that downgrade.

Separately, the new chair of the OBR Jonathan Haskel is known for his argument that official statistics understate investment in intangibles like software and data. His latest research suggests AI-related investment is already visible in US productivity figures, and he has long been optimistic about tech’s impact on the future.

While it seems unlikely that such factors will make it into the OBR’s calculations next month, there is a real debate here.

Officially, however, part of the job at the Budget is to identify cuts to fund the Defence Investment Plan, inherited from Sir Keir. That’s before funding the additional move to 3% of GDP and a new social care system.

Even a promise of less welfare spending looks like being built on an upfront investment in jobs for young people.

One change from last year is that so far, the government has parked the “pitch-rolling” with a silence that would rival the Trappist monks.

Instead, policy announcements are strategically timed such as the “Your First Home” scheme just as the Labour party conference got underway. We can expect to hear plenty more as the Budget nears.