Andy Burnham, the UK’s new prime minister, has been buoyed by his bounce in opinion polls. But the day of economic reckoning is fast approaching, with the budget just two short months away.
Burnham displayed no Macbeth-like “infirmity of purpose” in seizing the crown from Keir Starmer in his ruthless coup, but he has wobbled on the economy.
At the outset, he was forced to reassure bond markets he would stick to his predecessor’s fiscal rules—strictures he once dismissed as financial fetishism. With long-term borrowing costs hitting new highs over ballooning government deficits across the Group of Seven, it is just as well the PM expressed contrition when he did.
Three wise men played their part in smoothing ruffled market feathers when it became known they were shaping Burnham’s financial thinking.
Jim O’Neill is respected as a former chief economist at Goldman Sachs and an advisor to the last durable Tory chancellor, George Osborne.
As deputy governor of the Bank of England, Andy Haldane, now president of the British Chambers of Commerce, was a lone voice in predicting (correctly) an inflationary surge in 2022.
Richard Hughes, as ex-chair of the Office for Budget Responsibility, promised to bring fiscal credibility.
O’Neill and Haldane share Burnham’s passion for reviving the fortunes of the rustbelt in their native North of England; O’Neill’s ideas motivated Osborne’s Northern Powerhouse initiative, while Haldane has long advocated boosting transport links and infrastructure spending to bridge Britain’s regional divides. So, natural allies, but also hardheaded realists.
However, none of the trio is taking an official position. O’Neill told the Financial Times last week that he’s “decided to not take a formal role”, citing the constraints of having to put his financial assets into a blind trust. “It’s not because of any policy disagreements,” he said, adding that he hopes to maintain an informal relationship with Burnham and his team.
Haldane not joining the government does seem to be policy based. In a blistering FT article last week, he condemned its previous budgets as ”outright harmful” to the private sector. Haldane called for the government to announce “a moratorium on further rises in the tax and regulatory burden on consumers and businesses for the remainder of this parliament... the equivalent of a fiscal Hippocratic Oath to ‘do no harm’ to private-sector sentiment.”
Hughes, the third member of this troika, is ideally equipped to score the new government’s spending plans. In January he testified to the House of Lords that the Labour Party’s 2024 election manifesto looked “nothing like” its actual tax-and-spend trajectory once in government; but he too has failed to find a desk at No. 10.
Burnham commands the political stage after only one month in office and has a limited window to refine his pitch on prosperity. He is the first PM since Boris Johnson to cheer up uncommitted voters, his can-do optimism infinitely preferable to doomy Starmer.
His “hopey-changey” message receives plaudits for echoing presidents Bill Clinton and Barack Obama at their most winning; Burnham’s mastery of social media has already made him better known than a pop star whose song has been at No. 1 for 20 weeks—he has 57% name recognition while Olivia Dean has only 55%.
Burnham also beats populist parties of the left and right at their own game. By promising to get rough sleepers indoors by Christmas, help cut the bills of pubs, clubs and musical venues at the expense of garish vape shops on the high street, and in valuing “the hard hat as much as the graduation cap” in education, he reaches those other politicians don’t and resonates with ordinary voters in ways neither Starmer nor his Tory predecessor Rishi Sunak could.
The 28 October budget will surely force some sharper choices than today’s loosey-goosey Burnham comments on how to put Britain back on a path to sustained growth.
Last week, the UK declared a surprise budget deficit of £1.8 billion—a dismal figure, because there is usually an income boost from scheduled payments of self-assessed income tax.
The PM has stopped talking about alleviating cost of living pressures—over which he has little control, given the many international factors at play—and speaks empathetically instead about giving household budgets “breathing space” where he can, and promises a major 10-year overhaul of utilities and energy dependency.
It doesn’t demand an excess of cynicism to realize this change of emphasis kicks the can down the road and is intended to deflate expectations of how different life will feel for many in the short term. Having campaigned in earnestly stirring poetry, the Burnham government is getting ready to govern in prose. ©Bloomberg
The author is the editor of the Times Literary Supplement.