UK Treasury Examines Scope for Extra Borrowing to Boost Investment
Potential for Increased Public Borrowing and Investment
Exploring Flexibility Within Fiscal Rules
LONDON, Aug 5 (Reuters) - Officials at Britain's Treasury are looking at possibly raising billions of pounds in extra borrowing by using flexibility within the government's fiscal rules, The Times said.
Finance minister John Healey told the newspaper there was "scope for more and more rapid investment." It said the cash could be spent on infrastructure, housing and help for business.
Changes to Fiscal Rules and Implications
Former finance minister Rachel Reeves changed Britain's fiscal rules in 2024 to take into account public sector assets when considering the government's debt levels, offering the possibility of more public borrowing for investment.
Analysts have said extra borrowing could be channelled through public agencies such as the British Business Bank, the National Wealth Fund and the National Housing Bank.
Regional Impact and Devolution Plans
Some money could be shared with regional mayors, boosting new Prime Minister Andy Burnham's plans to devolve power away from central government, The Times said late on Tuesday.
Burnham said last month he would use "any flexibility" within the fiscal rules but would maintain budget discipline.
Market Reaction and Investment Projections
Investors in British government debt are watching for signs of more borrowing by the new government. Yields on gilts are the highest among the bonds issued by Group of Seven rich nations.
Long-dated gilts were little changed on Wednesday.
The Times said the Resolution Foundation think tank believed the government could invest an extra £9 billion a year by 2031 by boosting the scale of the National Wealth Fund.
Britain's government borrowed £128 billion in the 2025/26 financial year.
Official Statements and Upcoming Budget
A spokesperson for the finance ministry said Healey was focused on boosting business and helping with the cost of living across the country.
"As has always been the case, the Chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals," the spokesperson said.
Healey is due to announce his first budget on October 28.
(Writing by William Schomberg, Editing by Paul Sandle)
