UK to cut welfare spending before next election, Healey says

what happened

UK Finance Minister John Healey said the government will reduce its welfare benefits spending by the time of the next election. He made the comment in an interview with the BBC, broadcast on Thursday, Reuters reported.

Healey said the benefits bill must come down, but not through crude cuts. He did not give a firm commitment on timing, and the next election is due no later than mid-2029. Wednesday's budget offered short-term support for households facing higher energy prices and raised taxes on banks, savers and landlords. It did not address the long-term problem of welfare costs for pensioners and working-age people in poor health, which will reach more than 11% of economic output this year.

Healey said spending must not keep growing and stressed youth unemployment. A government review into young people not in education, employment or training is due next month, and a review of the disability benefits system is being finalised.

why it matters

The Conservatives and some bond investors see rising welfare spending as a sign Labour lacks resolve to curb borrowing. Still, Reuters reported that 10-year gilt yields fell to a four-week low on Thursday, suggesting markets reacted broadly well to the budget. No specific welfare measures have been set out yet, so the key question for investors is the timing and scale of any real reduction.

market impact

Gilts and sterling: markets reacted well to the budget, but welfare cut details remain unclear

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