- Andy Burnham moved to calm volatile bond markets on Wednesday as surging borrowing costs threatened to wreck plans for his government’s crucial first budget next month.
- After a days-long sell-off of government bonds, Burnham promised decisions would be “grounded in fiscal responsibility.”
- On Wednesday, the cost of 10-year borrowing for the government hit its highest level since 2008, at 5.29%, before easing slightly.
- In his first PMQs clash with Kemi Badenoch, Burnham blamed the Conservative leader’s party for leaving the UK vulnerable to market turmoil.
- Badenoch criticized Burnham for not saying no to any spending request, saying a prime minister needs to be a leader, not a people pleaser.
- Burnham said his budget would “stick to the fiscal rules, but at the same time, we will help reduce cost of living pressure on our constituents.”
- The chancellor has repeatedly stressed that fiscal discipline is the “bedrock” of government policy.
- Government insiders told the Guardian they believed it would be very difficult for Healey to deliver a budget that had less than double-digit headroom, given the signal that would send to bond markets.
Andy Burnham moved to stabilize the bond market on Wednesday as the cost of 10-year government borrowing reached 5.29%, the highest since 2008, threatening his administration's first budget. This surge followed a days-long sell-off of government bonds, raising concerns about fiscal stability.123
In his first appearance as Prime Minister, Burnham promised that his budget would be “grounded in fiscal responsibility.” He acknowledged the challenges posed by the rising borrowing costs, which could limit Chancellor John Healey's spending power significantly. Insiders indicated that delivering a budget with less than double-digit headroom would send a negative signal to bond markets.8
During a heated exchange with Kemi Badenoch, Burnham attributed the current market turmoil to the previous Conservative government's policies. Badenoch criticized Burnham for not rejecting any spending requests, stating, “a prime minister needs to be a leader, not a people pleaser.” Burnham countered that his budget would adhere to fiscal rules while also addressing the cost of living pressures faced by constituents.45
As the government navigates these financial challenges, the emphasis on fiscal discipline remains a cornerstone of its policy, with Burnham asserting that responsible decisions are essential for economic stability.7
“The sell-off pushed 10-year yields to their highest since 2008, and government insiders say it would be very difficult for Chancellor John Healey to deliver a budget with less than double-digit headroom. In his first PMQs clash, Burnham blamed the Conservatives for leaving the UK vulnerable, while Badenoch called him a 'people pleaser.'”
The Guardian
