Kristalina Georgieva, the IMF's director general, put it plainly: "The UK is actually one country where action to reduce debt and deficit has been taken." That, she said, is why "we see the UK in that sense enjoying a bit of better growth."
Silvana Tenreyro, the IMF's chief economist and a former Bank of England rate setter, said the UK's deficit reduction "stands out" among G7 peers. Alongside the comments, IMF data underscored that Britain's consolidation is set to outpace the rest of the G7 and referenced borrowing totals that bundle both national and local authorities.
The fund also upgraded its UK growth forecasts. Healey was in Bangkok to hear the praise firsthand.
Back home, the nod from the IMF got attention. At an Oxford event with Nobel laureate Paul Krugman, former chancellor Rachel Reeves stood up from the audience to cite the IMF's take while defending her record. The handoff now sits with her successor.
Healey faces crosswinds. Some Labour voices are pushing for higher public spending, and Prime Minister Andy Burnham has made easing living costs that affect millions of voters a priority. Between 2024 and 2025, the measures in Reeves' budgets increase tax receipts by £66 billion.
When pressed in Bangkok on whether he would follow the IMF's call to "stay the course" and ensure borrowing declines in every year of the Office for Budget Responsibility's forecast, not only at the end, Healey would not say. He did tell reporters that departments will have to "manage what they've got."
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With revenues in mind, Healey has submitted plans to lift the bank surcharge. Bloomberg Intelligence estimates the change could bring in about £3 billion a year. The prospect shaved roughly 3 percent from UK bank stocks and soured sentiment among attendees from the IMF and the Institute of International Finance, where some had already cautioned that additional levies on banks or capital gains send the wrong signal.
Helge Berger, the IMF's European department deputy director, urged the chancellor to rein in spending rather than tax banks. UK taxes are "historically for Britain, a high number," he said, adding that more increases would be "less productive." He pointed to pension and welfare reform as "where we would put the emphasis rather than on the tax that you mentioned."
The fiscal rule to watch: day to day spending must be funded by tax in 2029 to 2030. The buffer against that target is now estimated at £10 to £20 billion, down from £24 billion in March, which implies either more revenue or savings to close the gap. Healey's balancing act is happening with Britain paying the highest yields on benchmark debt in the G7, a lingering effect of the 2022 Liz Truss episode despite efforts by subsequent chancellors starting with Jeremy Hunt.
Debt service is already hefty. The Office for Budget Responsibility pegs annual interest costs at £110 billion, rising to £140 billion by decade's end. Even small improvements matter: the National Institute of Economic and Social Research estimates that each percentage point of credible deficit progress trims 10 to 15 basis points from 10 year gilt yields, saving £3 to £4.5 billion a year.
Two weeks out from Oct. 28, the budget path is clear but narrow: the IMF wants borrowing to fall across the whole forecast window, some politicians want more spending, and markets are sensitive to bank taxes and elevated gilt yields. The mix Healey chooses on the bank surcharge, broader taxes and departmental spending will shape that £10 to £20 billion fiscal cushion.
In plain English: watch bank stocks, watch gilts, and watch the tone on spending versus structural reform. If the plan looks disciplined and growth friendly, the payoff could be lower borrowing costs. If not, that cushion gets thinner.
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