Burnham must be upfront about tax or risk spooking the bond markets | Heather Stewart

Andy Burnham’s thumping victory in the Makerfield byelection came and went without the bond market rout Rachel Reeves’s backers had warned about. But as he moves towards the premiership, Burnham would be wise to set clear expectations about tax and spend, and to be upfront about the fact that not everyone can be a winner. The yield, or interest rate, on UK government bonds did move up on Friday, but only modestly. That relative calm was partly because a Burnham win was already priced in; and because he took out the insurance policy of loudly promising to stick by Reeves’s budget rules. His timing was also lucky: better-than-expected inflation figures earlier in the week eased market concerns about the Iran war’s impact on the cost of living, which has helped to bring yields down. But Burnham’s every pronouncement – and that of whoever he picks as chancellor – will now be watched intently by the markets. If his team are serious about nationalisation of key utilities , they may well want to borrow significantly more – something Reeves’s rules allow for, where the government gets a financial asset, such as a shareholding, in return. The logic is that the nation’s balance sheet has barely changed, if it takes on a new liability to bondholders, but that’s matched with something that generates a financial return. …