Andy Burnham's first grilling in Parliament since taking office in July was all about the money. He argued that the high national debt is a legacy of earlier Conservative governments, and when pressed by opposition leader Kemi Badenoch over rising borrowing costs he said, "The turbulence on global markets are because of the exposure that they left behind." Burnham insisted his team will stick to the rules, saying, "This is a government grounded in fiscal responsibility. It will stick to the fiscal rules."
Badenoch pressed him to commit that the upcoming budget would not include tax increases and to renounce any additional borrowing. He did neither. Burnham said he wouldn't "write the budget" in the chamber and noted he has moved to trim some taxes since taking power, while turning the critique back on the previous government: "Debt was rising as a percentage of GDP under the government that she served in."
UK government bonds sold off again on Wednesday as global anxiety over energy prices and inflation flared. At one point, the 10‑year gilt yield climbed seven basis points to 5.29%, a level not seen since August 2007, before later retreating.
Those higher rates, combined with stronger inflation, are set to erode the government's fiscal safety margin by around £12 billion, cutting into what Bloomberg Economics calculates as a £23.6 billion cushion. The rules require that by 2029 tax revenues cover the state's everyday spending. Asked about the projected loss of headroom, Burnham's spokesman, Tom Wells, did not offer a view.
Burnham said he has been "quite clear" about "the need to get the welfare bill down." Wells added, "We've got to get serious as a country about getting the welfare bill down, but that doesn't mean crude cuts that simply push people into crisis and create bigger costs elsewhere," and declined to say whether it would fall before the next election, saying the government is focused on reducing spending in that area.
Defence will also test the numbers. Defence Committee Chairman Tan Dhesi urged lifting outlays to an amount equal to 3% of GDP by 2030, warning that "vibes alone are not going to be enough." Bloomberg reported on Tuesday that the military still anticipates the government will stick to that 2030 ambition despite claims of backsliding. Burnham said he's committed to the country's defence.
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Labour's pledge is to increase core defence outlays to 3.5% of GDP by 2035, though there is not yet a clear roadmap. As things stand, plans point to 2.6% next year and 2.7% by 2030.
Burnham took aim at the European Union's Made in Europe strategy, warning it could throw up barriers for UK industries such as steel. "The Made in Europe agenda could pose significant problems for British Steel," he said, noting he would bring the issue up during a UK‑EU summit scheduled for later this year, aiming to "get a good deal for British Steel."
For your wallet, here's the upshot: pricier government borrowing and a thinner fiscal cushion raise the bar for new spending, defence paths remain in flux, and EU industrial policy could pinch specific sectors. If you hold UK assets, those are the policy currents most likely to tug on valuations and earnings.
