Andy Burnham’s team keenly aware of fiscal tightrope: avoiding a Truss-style meltdown
New UK Prime Minister Andy Burnham and his team are treading carefully, balancing bold change promises with fiscal discipline to avoid market turmoil reminiscent of Liz Truss’s brief tenure.
Andy Burnham has not quite gone for Keir Starmer’s extreme caution in the run-up to entering No 10 – but he is certainly aware that any early wrong moves would cost him.
“We need to be very careful,” says one member of Burnham’s team. “We need to show that he’s serious about change as the public will form their opinion of him very quickly. But we have to avoid a Liz Truss-style moment: it’s almost like the markets are waiting to be spooked.”
Another senior member of his team said: “We know that there’s a very delicate balance between capturing people’s attention and not spooking the markets.”
Burnham’s choice of John Healey as chancellor – an unshowy veteran MP who has been Treasury minister – and advisers such as Jim O’Neill and Andy Haldane is a sign he is prioritising steadiness and experience.
In the garden of Downing Street after he walked into No 10 for the first time, Burnham was clear his priority was stability. He said he would look at “any flexibility” within the government’s existing fiscal rules to help borrow billions more to invest in infrastructure – but insisted he would take a measured approach.
“I’ve said we’ll stick to the fiscal rules and by that I mean the existing fiscal rules and use, obviously, any flexibility within them. But we will stick to the existing rules,” he said. “So none of this is about taking risks with the economy. I’ve never done that in any role that I’ve had. I’ve always taken a very prudent approach.”
He will have to plug a multibillion-pound hole in the defence budget, is expected to consider raising the personal allowance to lower taxes, must fund a council housebuilding programme and will probably have to pay for the costs of taking Thames Water and potentially other utilities into public ownership.
The markets were slightly jittery on Monday but there was no Truss-style meltdown – and businesses appeared reassured by the choice of Healey, while even rival politicians found it difficult to criticise the appointment. It’s only day one but there have been no smashed vases yet.
