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Britain’s economy faces a ‘heart attack’, Andy Burnham’s former adviser warns
Former Bank of England chief economist Andy Haldane has warned that Prime Minister Andy Burnham’s Budget could leave Britain vulnerable to a serious financial crisis. Haldane says the government has failed to strengthen its finances while borrowing costs remain high, risking a repeat of the market turmoil seen after Liz Truss’s 2022 Budget.
Haldane, who informally advised Burnham after he took office in July, says the UK’s fiscal position is more precarious than at any time in the past 50 years. He argues that borrowing costs are the highest in the G7 despite Britain having a lower debt burden, and that the government should raise £30bn to £40bn through tax increases or spending cuts. He also criticises plans to reduce fiscal headroom from £23bn to £16bn, warning that a crisis could harm the poorest most.
In short
- Haldane warns the Budget risks a financial crisis.
- He says Britain’s fiscal position is precarious.
- He calls for £30bn to £40bn in savings or tax rises.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Haldane’s warning is that high borrowing costs and limited fiscal headroom leave the UK exposed to a sudden loss of market confidence, which could sharply raise the cost of government borrowing and force damaging adjustments. Building a larger fiscal buffer through tax rises or spending restraint could reduce that risk and protect public services and lower-income households from a crisis.
The case against
The government could argue that reducing headroom or declining to raise £30bn–£40bn reflects choices about supporting public services, households and economic growth, rather than indifference to fiscal risks. A crisis is not inevitable, and abrupt tax rises or spending cuts could weaken demand and investment; the government may judge that its current plans balance resilience with those costs.
Explained simply
The government borrows when its spending exceeds the money it raises through taxes. The amount it owes, and the cost of borrowing more, can affect how much room it has to fund public services or respond to economic shocks.
The prime minister sets the government’s budget, while the Bank of England helps manage inflation and interest rates. Andy Haldane is a former chief economist at the Bank; “fiscal headroom” means the government’s cushion for meeting its budget rules if forecasts change.
Investors’ confidence matters because it influences the interest rates the UK must pay to borrow. In 2022, markets reacted sharply to the government’s budget plans under Liz Truss, raising borrowing costs; a similar rise could put pressure on public spending and households.
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