The major Budget questions facing John Healey in four charts

John Healey faces numerous challenges while delivering the UK Budget, aiming to ensure the economy grows. Investors are entering the budget with many unknowns, and Healey must balance expectations of various groups, including businesses, traders, backbenchers, and voters. Voters desire support during a difficult winter with rising energy prices, while businesses, having been disappointed by recent budgets, hope for relief on their costly operations.

Traders remain skeptical of the government's plans for increased spending, and ministers and backbenchers expect Healey to exhibit a more Labour approach in his fiscal statement.

Healey must address several major economic tests, including the disjointed jobs market, spiraling inflation, and complicated public finances. Healey must find solutions to reverse the sluggish growth patterns of the UK economy and provide clarity on his fiscal agenda to win over key interest groups. Successfully managing the jobs market could yield a £40bn windfall for public finances, according to EY.

However, with youth unemployment surpassing 16% for the first time in 11 years, Healey faces a difficult task in reversing this worrying trend.

The Chancellor also needs to manage expectations regarding businesses and workers, as top UK banks attribute their job cuts to AI and the jobs market struggles to improve. Healey must prove his ability to incentivize employers to create more job opportunities, as his support in this area will be closely scrutinized. Additionally, Healey is tasked with providing a "breathing space" Budget that addresses concerns of paying households, as living standards have been disputed by think tanks like the Resolution Foundation.

If Healey fails to maintain growth in real household disposable income, it could lead to increased financial strain for the bottom half of the income distribution.

Another critical challenge for Healey is controlling public debt. Following the pandemic, governments have tried to curb borrowing to ease the burden on public finances, but debt levels have continued to rise. With just six years since the gross debt hit £3 trillion, the OBR has warned that promises to limit borrowing have not been fulfilled.

Healey may need to demonstrate to the OBR and markets that fiscal consolidation will continue, and borrowing will not be loosened. However, the push for growth and economic development may lead to increased spending, further straining public finances.