Key facts
- Andy Burnham indicated potential tax rises are possible due to the UK's fiscal situation.
- Chancellor John Healey's first month saw a £1.8bn government borrowing deficit.
- Economists suggest limited capacity for new spending pledges in the Autumn Budget.
- Capital Economics estimates a maximum of £15bn in additional borrowing might be tolerated.
- The UK is projected to have a deficit exceeding four percent of GDP for the seventh year in a row.
Andy Burnham, in comments made during a visit to Ukraine, acknowledged the challenging fiscal position of the UK and suggested that tax rises may be necessary to fund spending packages in the upcoming Autumn Budget. He emphasized that any measures would be carefully considered and fully funded, stating he would "not be unrealistic" about the state of public finances.
This comes as Chancellor John Healey prepares his first Budget, facing pressure from strained public finances. July's public sector borrowing figures revealed a surprise deficit of £1.8bn, exceeding market expectations. Economists from Capital Economics have warned that the government has limited capacity for additional borrowing, estimating that markets might tolerate only around £15bn under favorable conditions, and that tax increases are likely.
Furthermore, a separate analysis indicated that the UK is on course to record a deficit above four percent of GDP for the seventh consecutive year. Burnham, drawing on his experience running Greater Manchester with "rock solid finances," insisted he would "try to help" Britons without taking risks with their jobs or household finances.