Burnham Is Maxing Out Britain's Credit Card, Tax Hikes And Borrowing Will Foot The Bill
Tax rises and increased government borrowing now look almost inevitable under Andy Burnham, warns Nigel Green, CEO ofdeVere Group, one of the world's largest independent financial advisory organizations.
The warning comes as Prime Minister Andy Burnham told the BBC the NHS will "collapse" unless social care is reformed, while admitting he cannot put a timeline on the fix.
It follows a week that has already delivered a rough sleeping fund, an electricity VAT cut, and a bus fare cap, all signed off while Parliament is in summer recess and before a single line of the autumn Budget exists.
Bond markets reacted within hours of Burnham entering Downing Street. The 10-year gilt yield pushed back above 5%. The 30-year hit 5.75%, a two-month high, the moment the new Prime Minister talked about fiscal flexibility.
The scale of the challenge is stark. Public borrowing hit GBP 23.3 billion in May alone, up more than 30% year on year. Debt interest for that month was the highest on record. Public debt is above 95% of GDP, the worst level since the 1960s.
AdvertisementNigel Green says there are only two routes to fund pledges on this scale, and every signal from Downing Street points to both being used at once.
The borrowing route carries its own cost, he warns, one already showing up on mortgage statements rather than tax bills.
The pressure is compounded by defence commitments inherited rather than chosen.
The chief executive says the autumn Budget will be the moment that number finally has to appear.
He concludes:
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