UK Chancellor Healey to Balance Bond Market and Labour in AI-Focused Budget

Bloomberg reported that by the time Healey sits down in the House of Commons on Wednesday afternoon, gilt traders may be more pleased than the 404 lawmakers who crowd Labour’s benches. The Treasury has signaled a “steady as she goes” budget, buoyed by praise from the International Monetary Fund and investors who have flocked back to UK debt during a global bond selloff, Bloomberg said. The Bloomberg report said Healey must deliver what his predecessor, Rachel Reeves, could not: a budget that keeps both the bond market and the governing Labour Party happy.

Healey said he would use the budget to harness AI to bolster Britain’s security and prosperity against risks in an accelerating global technology arms race. The chancellor said Andy Burnham’s government would commit hundreds of millions of pounds to develop a “distinctively British” approach to AI. He said he would make the biggest ever investment to guard against cyber risks and the disruptive potential of the technology, with fresh investment for Britain’s AI Security Institute and other critical institutions alongside public money to support the use of the technology for good.

“AI will transform daily life: every firm, community, hospital, school and every aspect of our economy can benefit,” Healey said. “I understand and share the concerns of working people, so I am setting out a distinctively British approach to AI – one that doesn’t leave workers behind and defends our national interest, while ensuring the benefits of AI-enabled growth are felt right across the country.”

Three months into Burnham’s premiership, Healey is preparing the budget against a volatile backdrop as war in the Middle East sends shock waves through the global economy, pressures public finances and reignites the cost of living crisis. Healey has vowed to give households and businesses “breathing space” as energy costs surge this winter. On Friday, tensions in the Gulf sent oil above $117 a barrel at one point, its highest level for six months, the Guardian reported. Healey will also use his Commons speech to flesh out Burnham’s policy priorities after Burnham replaced Keir Starmer this summer and to set out a vision for Britain amid a turbulent global economic outlook.

The Guardian reported that official figures show AI investment has helped the UK outperform gloomy economic forecasts as the Iran war pushes up inflation and drags down business confidence, powering the country to the strongest growth performance in the G7 in the first half of this year. Healey said he wanted to seize the opportunities of AI to raise living standards, back UK businesses and support economic growth as a central plank of Labour’s plan for growth.

Concerns are growing over national and industrial security as AI opens up the danger of cyber-attacks, IT systems turning rogue and job losses. Websites around the globe went dark this week after a serious vulnerability was found in a computer language used to build much of the world wide web, a development made possible by rapid AI advances, the Guardian reported. Barclays is cutting 5,000 jobs as the rollout of AI across the bank helps it make efficiency gains, the newspaper also reported.

Healey said he wanted to protect against risks while nurturing homegrown businesses and talent to cut Britain’s dependency on other countries making strides in AI. New investments would be made in AI chip design capability in Edinburgh and in a new AI Centre of Excellence in Manchester. The government would spend £10 million a year to lead UK work on understanding how AI will reshape jobs and industry. The Treasury said it would back up to £300 million in public-private investment in a new AI Biosecurity Lab intended to bring together scientific expertise to protect people from emerging biological threats.

Defence Secretary Wes Streeting warned on Thursday that UK households should make preparations against mounting risks from weather, cyber or other serious emergencies, advising supplies to last 72 hours under a campaign called Be Ready, the Guardian reported. The advice comes as Silicon Valley bosses sound the alarm over existential threats AI could pose and amid official concern over the climate crisis, technological dependency and hostile state threats. Dan Jarvis, the security minister, said he was proud the UK had repeatedly been at the forefront of global efforts to use AI for the benefit of humankind.