Analysis: Europe — 15 October 2026
UK Chancellor Healey rejects CGT equalisation and mansion-tax widening ahead of Budget
UK Chancellor John Healey has, in successive decisions this week, rejected equalising capital gains tax with income tax, refused to lower a planned mansion-tax threshold from £2 million to £1.5 million, and ruled out extra business rates on large retail warehouses. A Treasury source called CGT equalisation “batshit crazy.” The moves stand out because Prime Minister Andy Burnham won office promising to end four decades of “austerity, privatisation and deregulation” and to tax wealth more heavily. The Budget is due on 28 October.
Burnham’s conference rhetoric still points to a larger, more interventionist state. Inside Labour, the revived Tribune Group, associated with First Secretary Louise Haigh, has pushed wealth taxes and public investment. A rival Labour Growth Group had argued that housing, energy costs and employment taxes were blocking growth. The IMF’s October World Economic Outlook raised UK growth this year to 1.3 per cent, citing some AI-related demand, but cut 2027 to 1.2 per cent, with inflation seen averaging 2.8 per cent next year. The Institute for Fiscal Studies has flagged a possible £35 billion annual hole by 2030–31. Bank of England Governor Andrew Bailey has warned that budgets must stay “credible” with gilt investors, recalling 2022. Britain’s government borrowing rate is the highest in the G7.
The tax rejections are reported decisions. The claim that the Budget will therefore be “surprisingly Right-wing,” as Damian Pudner argues in UnHerd, is analysis. The contradiction is structural: Burnham’s offer is more public provision; Healey faces a post-war-high tax burden, rising spending and little headroom. If taxes are not raised and spending is not cut, gilt markets remain the constraint. Whether Burnham keeps Healey or the Chancellor yields is unresolved.
Sources: UnHerd.
French lycée protests spread as Paris is told its debt is a fiscal problem
French lycée protests that began in mid-September in Créteil have closed hundreds of schools, filled Place de la Bastille and spread to Belgium, Italy and Greece. Students’ stated demands are more teachers, less overcrowding and buildings that are not collapsing. UnHerd reports almost 7,000 arrests, 86 per cent of them minors; a 15-year-old lost a hand to a stun grenade and a 16-year-old was partly blinded by a rubber bullet. The Prime Minister has denounced “violence” and accused politicians of exploiting the unrest. Marine Le Pen leads voting intention six months before the presidential election.
The unrest lands on a fiscal squeeze. French public debt was reported at 119 per cent of GDP in the second quarter; the deficit has been running above 5 per cent of GDP. ECB President Christine Lagarde said the primary solution to French debt lies in French fiscal policy. Markets have at times priced the French–German bond spread near levels last seen in the 2011 euro-area crisis. Spain’s September CPI was confirmed at 4.9 per cent year on year, with core at 3.1 per cent, adding to ECB caution on rates—tighter money that raises the cost of French borrowing.
Yanis Varoufakis treats the unrest as a revolt against austerity for schools and support for banks and arms firms. That is his interpretation. The documented tension is simpler: classrooms need money the Treasury may not have, while defence and debt interest compete for the same euro. The government can wait the students out; the National Rally can convert disorder into votes. Whether the protests produce a fiscal programme or fade by Christmas is unresolved.
Sources: UnHerd, InvestingLive.