‘Walking a tightrope’: Burnham’s borrowing plans clash with fiscal realities

Andy Burnham would enter Downing Street already “boxed in” by financial markets if he signals a rise in borrowing to pay for a more expansive policy agenda, bond investors have warned. The newly elected MP for Makerfield, who is widely expected to be the next prime minister, could also quickly come under pressure if he chooses a chancellor who is seen to be too leftwing by bond markets. “He is boxed in by the fact that government finances are in a weak position, and if he chooses to ignore this reality, then he could find himself under pressure very quickly,” said Mark Dowding, chief investment officer at the hedge fund RBC BlueBay. With Liz Truss’s disastrous mini-budget still casting a shadow over UK fiscal policy, Burnham alarmed some investors last year when he said the UK was “in hock” to the bond markets, a stance he has since moderated in interviews. Dowding said: “Markets are more prone to be sceptical at the outset if he tries to be too adventurous … from that perspective Burnham could be walking a tightrope partly of his own making. It won’t take too many headlines for the bond markets to suddenly be on its back.” If he does become prime minister, the former Manchester mayor will be expected to follow through on pledges such as nationalising key utilities and a council housebuilding programme. How he pays for them remains unclear. …