Healey is inclined to say 'hang on' and let matters settle down before rushing down the higher tax route, says ALEX BRUMMER

See more This is Money on Google - save us as a Preferred Source Updated: 02:41 EDT, 5 September 2026 There is no escaping the reality that it has been a gruelling week for Chancellor John Healey.As he sat down with fellow finance ministers in Asheville, North Carolina, bond yields across the globe popped and the interest rate return on British ten and 30-year gilts hit the highest level among the G7 richest nations.It is no longer credible to claim that what happened back in 2022, when Liz Truss was prime minister, is to blame for the UK still being an outlier.The exorbitant cost of borrowing for the Government, up to £135billion in the current fiscal year, has led to speculation that its growth mission will be thrown off course and the Budget on October 28 will be harsh.As much as £12billion to £14billion of headroom, spare capacity for current spending on the Government’s books, has been eaten up by higher borrowing costs. That is before Prime Minister Andy Burnham’s cost of living reliefs on energy, bus fares and business rates for pubs are added back. Tough week: There is no escaping the reality that it has been a gruelling week for Chancellor John HealeyThe last thing Britain needs is more punishing tax rises. Forget the cost-of-living crisis. After-tax earnings for working people are being savaged. Savers and enterprise are being pummelled by increases in dividend and capital gains taxes and changes to salary sacrifice pensions. Business is still reeling from the employers’ national insurance rise, changes in employment rights, the higher minimum wage and less heralded levies such as the packaging duty.Former Bank of England chief economist Andy Haldane, a sometime adviser to Burnham, argues enough already. Healey’s predecessor Rachel Reeves listened politely to business, then hammered it with all manner of new levies.Healey, I believe, is more inclined to recognise the burden of a revenue assault, which will take the nation’s tax take to a record level of 38 per cent of GDP by 2030-31. There is an assumption Healey will seek to restore headroom through a new round of wealth taxes and raids on businesses such as the banks.By all accounts, he would like to avoid a noisy Budget on October 28 and not pile further misery on the consumer or commerce if it can be avoided. This is possible because he is putting off the funding of the extra cost involved in the Defence Investment Plan until a Treasury review next year. Tory leader Kemi Badenoch advocates the extra defence spending is paid for by welfare cuts.Reeves demanded those with the broadest shoulders, including businesses and the better-off, take the pain for extra state spending. Healey is inclined to say ‘hang on’ and let matters settle down before rushing down the higher tax route.In the coming days we expect to hear more from Healey about boosting Britain’s sub-optimal growth rate.The Chancellor, like many of his predecessors, may well be knocked off course by bond market vigilantes sceptical of the numbers and ambition.He, at least, appears to recognise that AI, technology and innovation – if properly galvanised and supported across the regions – have a dynamic role to play.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you