Category Archives: Economic policy

Burnham beware, the bond markets will demand proper answers in the budget | Nils Pratley

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Fair to say the current sell-off is international, but the PM has said little yet to make investors rethink the UK’s status

It’s too soon to say the bond markets have turned on Andy Burnham. Tuesday’s spike in gilt yields, taking the UK’s 30-year borrowing costs to their highest level since 1998, was part of an international sell-off of government debt.

The main contributors are well known. The Iran war, by increasing the cost of energy, has overturned the comforting start-of-the-year thesis of falling global inflation and interest rates. A plunging Japanese yen has kicked away another assumed source of financial stability. The US treasury secretary, Scott Bessent, hasn’t calmed nerves with his solo, and so far futile, attempt to bring down US yields. Meanwhile, the early stage of the AI revolution is an exercise in issuing squillions of debt before long-term returns on capital can possibly be assessed meaningfully.

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UK long-term borrowing costs could halve chancellor’s budget headroom

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Yield on 30-year gilts highest since 1998 as rout triggered by global factors underlines tricky backdrop John Healey faces

The chancellor’s headroom against Labour’s fiscal rules could be almost halved at his first budget if the current global bond sell-off persists into the autumn, economists say.

The UK’s long-term borrowing costs jumped to their highest level since early 1998 on Tuesday as investors dumped government bonds, betting on higher inflation.

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Andrew Griffith and Tom Tugendhat join Badenoch’s top team in Tory reshuffle

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Conservative leader sacks shadow chancellor Mel Stride and shadow foreign secretary Priti Patel

Kemi Badenoch sacked her shadow chancellor, Mel Stride, and the shadow foreign secretary, Priti Patel, in a sweeping Conservative reshuffle on Monday, replacing Stride with Andrew Griffith, and Patel with Tom Tugendhat.

Stride, who had been shadow chancellor since Badenoch became leader, was widely seen among Tories as failing to make an impression at a time when Labour had been under pressure over the economy.

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UK reports unexpected deficit of £1.8bn as John Healey prepares for first budget

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July data shows total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier

The UK government ran a larger than expected £1.8bn deficit in July, underlining the challenges facing the chancellor, John Healey, as he draws up his first budget.

City economists had expected a shortfall of zero for July, a month when Treasury receipts tend to be swollen by self-assessment income tax payments.

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Can Andy Burnham rewire the ‘Treasury brain’ to boost growth?

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PM wants to reduce department’s stranglehold on public purse and bring long-term thinking to economic policy

Andy Burnham is far from the first prime minister to dream of taming the power of the mighty Treasury.

Boris Johnson all but forced the resignation of Sajid Javid by handpicking his team; Margaret Thatcher favoured her economic adviser Alan Walters over Nigel Lawson, prompting the latter’s furious resignation; and Tony Blair and Gordon Brown’s power struggle was the stuff of Whitehall legend.

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Rising inflation underlines scale of Andy Burnham’s cost of living challenge

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PM’s plan to shield households from more pressure risks being overwhelmed by wider price rises

July’s increase in inflation, to 2.9%, is likely to be the first of several, underlining the challenge facing Andy Burnham in shielding consumers from a fresh cost of living squeeze this autumn.

Rising energy bills, as an increase in Ofgem’s quarterly price cap came into force, were the main driver of the jump in inflation, from 2.6% in June. That was partly offset by cheaper fuel prices – the knock-on effect of hostilities easing in the Middle East, after Donald Trump hailed his “memorandum of understanding” with Iran in June.

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UK heatwaves may have cost economy £4.4bn in lost output so far this year, analysis finds

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Verdant thinktank says cost could top £25bn a year by 2030 and calls for maximum temperature for working and urban redesign to cool down cities

Repeated debilitating heatwaves this summer are likely to have cost the UK economy more than £4bn in lost economic output by the end of July, new analysis shows.

Green thinktank Verdant had suggested June’s unseasonally hot weather had an economic cost of £2.36bn. Updating its assessment to include last month’s high temperatures, it finds a £4.4bn hit to output.

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Andy Burnham vows to ‘bring back hope’ as he unveils his cabinet

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New prime minister says government must ‘do better’ to deliver change but promises prudent approach to economy

Andy Burnham has said his arrival in power will “bring back hope” to Britain as he launched his premiership with the surprise appointment of John Healey as chancellor and a promise to repair the damage caused to communities during the Thatcher era.

The new UK prime minister acknowledged people were “fed up” with politics as he addressed the country after taking over from Keir Starmer in Downing Street, saying the government needed to “do better” to deliver real change.

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Burnham’s vow to end Labour briefing wars will test his grip on the party

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Tensions between his aims are already there, including disputes over key appointments such as chancellor

Andy Burnham’s vision for cleaning up Westminster politics is a utopian one: ending the dominance of the whipping system, Whitehall power hoarding and the “insidious briefing culture” of the bubble.

In his first speech on becoming Labour leader, he warned his party it “won’t beat Britain’s new right if we are consumed by infighting and pulling in different directions”.

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Restoring Britain’s health to 2014 levels could add 2% to GDP, thinktank says

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Health Foundation paper argues health is an economic asset and improving it could generate £72bn for public finances

Restoring the deteriorating health of the UK’s population to the level of 2014 would boost GDP by 2% and generate a £72bn dividend for the public finances, research suggests.

A paper by the Health Foundation thinktank, published on Sunday, argues the nation’s health should be valued by policymakers as an economic asset.

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Treasury yet to do due diligence on finding extra money for UK’s Nato spend

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How to hit the 3.5% of GDP defence spending promise would be a matter for ‘the next prime minister’, MPs told

The Treasury has as yet carried out no analysis of the trade-offs necessary for the UK to hit the 3.5% of GDP defence spending promise made to Nato, the department’s chief secretary has said.

Under robust questioning in a joint session of the Treasury and defence select committees on Wednesday, Lucy Rigby repeatedly said that how to fund additional defence spending would be a matter for “the next prime minister”.

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Lucy Powell agrees Ed Miliband would be ‘good’ as Andy Burnham’s chancellor

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Labour deputy leader says she thinks energy secretary would suit Treasury but ‘tittle-tattle’ over posts ‘unedifying’

Ed Miliband would make a “good” chancellor to Andy Burnham, Labour’s deputy leader, Lucy Powell, has said, before the likely next prime minister’s first major speech on the economy since he returned to Westminster.

Powell, who served as Miliband’s chief of staff in opposition and is close to the former party leader, appeared to endorse him to run the Treasury – although some in Burnham’s camp acknowledge such a move could be politically risky.

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‘Act on the evidence outside the window’: Andy Burnham urged to stick to net zero targets if he becomes PM

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Mayor of Manchester is coming under pressure from some to ditch net zero targets but this could be highly damaging on many levels

Britain’s net zero economy is booming. The sector is worth £100bn a year to the UK, has outpaced other sectors, and supports higher-paying jobs than the average.

For a union leader to suggest that the man who has overseen this impressive record – the energy secretary, Ed Miliband – would be a “noose around the neck” of job creation, as Unite’s Sharon Graham has done, might seem extraordinary.

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Reform UK plan to target EU nationals based in Britain ‘absolutely outrageous’

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Exclusive: Rights group says Nigel Farage’s party is reneging on promises made during the Brexit referendum campaign

EU nationals based permanently in the UK have expressed alarm over a Reform UK plan to target their rights to accommodation and employment, saying the policy is a betrayal of promises made in the Brexit referendum 10 years ago.

Under updated migration policies, Nigel Farage’s party would evict all overseas nationals from social housing and make it notably more expensive for companies to employ them, with both policies also affecting EU nationals who have settled status.

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Darren Jones says bond markets should be ‘content’ with Burnham’s economic plans – UK politics live

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Chief secretary to PM rules out leadership bid as he says he has received reassurances from Burnham

London, Oldham, Bradford and Keighley are to be the first towns and cities investigated by the grooming gangs inquiry, the Press Association reports. PA says:

The £65m probe is investigating how grooming gangs operated and how police, councils, health services, social care services and schools responded.

The announcement confirmed which areas will first face so-called local investigations – where serious failures have been identified in response to child sexual exploitation by grooming gangs.

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Burnham brings in top economists before possible leadership run

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Labour mayor giving advisory roles to ex-Bank of England economist and others seen as attempt to reassure markets

Three economic heavyweights have been brought in to advise Andy Burnham as he attempts to reassure the markets before his possible return to parliament on Friday and challenge to Keir Starmer.

Burnham is understood to be getting advice from Andy Haldane, a former Bank of England chief economist, as well as Richard Hughes, a former chair of the Office for Budget Responsibility and Jim O’Neill, a crossbench peer and former Treasury minister who worked on George Osborne’s “Northern Powerhouse”.

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Cut UK speed limits to reduce Iran war impact on consumers, thinktank urges

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Cap of 20mph in towns and cities and 60mph on motorways would cut fuel demand and combat rising prices, IPPR says

Britain should lower speed limits for drivers as part of a package of measures to reduce the impact of the Iran war on consumers, a thinktank has said.

Capping legal speeds at 20mph in towns and cities and 60mph on motorways would help reduce fuel demand and combat soaring oil prices triggered by conflict, according to the Institute for Public Policy Research (IPPR).

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Next Scottish government faces ‘really difficult’ spending choices, economists say

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Parties accused of ‘fiscal denial’ and failing to tell voters the scale of the challenge

The next Scottish government will need to make “really difficult” spending decisions soon after taking power, including tackling its large public sector pay bill, senior economists have said.

Economists with the Fraser of Allander Institute, at the University of Strathclyde, believe the manifestos published by Scotland’s political parties during the campaign failed to tell voters about the true scale of the challenge.

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Balancing UK’s welfare and defence spending ‘not zero-sum game’, minister says

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Treasury minister James Murray hits back at George Robertson’s criticism over military budget

A Treasury minister has said balancing welfare and defence spending “is not a zero-sum game”, amid stark warnings that the UK will have to increase its military budget to ensure national security during global volatility.

James Murray, the chancellor’s deputy, said the government was pushing ahead with the biggest sustained increase in defence investments since the cold war, but he would not say when it would publish its delayed defence investment plan.

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Collapse of US-Iran talks heightens fears of prolonged energy shock

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Oil prices and borrowing costs are expected to rise this week as tankers remain stranded in the Gulf

The failure of the US and Iran to reach a peace deal after marathon negotiations has put markets on alert for further oil and gas price rises.

With large numbers of oil tankers remaining stuck in the Gulf, the US vice-president, JD Vance, blamed the collapse of the talks on Tehran’s refusal to abandon its nuclear weapons programme, while Iranian sources hit back at “excessive” demands from Washington.

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