Brummer Urges UK to Build Financial Defences and Shrink State

Alex Brummer argues that the UK must build stronger financial defences and reduce the size of the state, even as the economy shows signs of resilience. His commentary comes amid growing concerns over global instability and the need for fiscal prudence.

Healey’s Budget Aims to Steady the Ship

Since taking office at the Treasury, John Healey has emphasized giving the economy breathing room following the intense policy activity of his predecessor. The previous government, led by Rachel Reeves, introduced 88 policy and tax changes in a single budget, followed by 70 more the year before. That pace left businesses, consumers, HMRC, and civil servants struggling to keep up.

Despite stagnation across much of Europe, the UK is growing at a 1.3 percent clip, raising questions about the government’s push for closer ties with the EU.

Avoiding Past Mistakes

Goldman Sachs estimates that deeper EU integration could add 1 percent to UK output, a tempting prospect. However, Healey’s Budget is expected to focus on domestic stability rather than bold shifts. Healey’s approach risks repeating the mistakes of James Callaghan, whose “steady as she goes” strategy in 1967 crumbled under economic shocks, leading to a currency devaluation and his resignation.

The UK faces similar risks today, from Middle East tensions to an unpredictable White House and fiscal troubles in France and Germany. Protecting Britain from these forces should be Healey’s priority, yet he may be tempted to rely on short-term gains rather than long-term resilience.

Slashing the State’s Role

A key test will be how Healey handles windfall taxes on profitable sectors. HSBC, Britain’s largest bank, reported a 32 percent rise in pre-tax profits to £7.2 billion in the third quarter. While investors hoped for stronger returns through share buybacks, the bank’s stock fell 5.4 percent, partly due to tax concerns.

Strategic Shifts and Market Reactions

HSBC’s focus on simplifying operations, such as divesting its stake in Allianz in Singapore, reflects a trend toward efficiency. Despite market fluctuations, its shares are up nearly 30 percent over the past year. Strengthening capital reserves is vital for facing geopolitical and technological challenges like AI.

In the consumer sector, Ben & Jerry’s continues to handle its political identity after being acquired by Unilever. Unilever spun off its Magnum ice cream brands in Amsterdam in 2025, streamlining its portfolio. Meanwhile, founders Ben Cohen and Jerry Greenfield are reportedly seeking an employee-owned structure, decades after selling the company for £245 million.

Preparing for Uncertainty

As Healey prepares to unveil his Budget, markets will watch for signs of fiscal discipline and long-term planning. Brummer insists the focus should be on building resilience, not just surviving current challenges. Whether Healey chooses restraint or stimulus, the stakes are high.