Andy Burnham sought to reassure jittery bond markets on Wednesday, promising his government's decisions would be "grounded in fiscal responsibility" as a sell-off in UK government debt threatened to derail preparations for his first budget. The intervention followed his statement to parliament a day earlier, in which pledges on public ownership of utilities, cost-of-living support and higher defence spending were welcomed by Labour MPs but blamed by critics, including his own former economic adviser Jim O'Neill, for worsening the market turmoil that has hit government bonds worldwide amid fears over inflation, deficits and AI-driven demand for capital.

The cost of 10-year UK government borrowing briefly hit 5.29% on Wednesday, its highest since 2008, complicating the task facing Chancellor John Healey ahead of his 28 October budget. Analysts warn rising debt interest could erode up to half of the £24bn fiscal headroom built up by his predecessor, Rachel Reeves, while insiders say Healey needs double-digit headroom to reassure markets, leaving little room for extra spending on defence or measures such as a VAT cut on electricity bills. The IFS's Helen Miller noted debt interest now consumes one in every £12 of government spending, adding to pressures from weaker growth forecasts and defence demands, while Kemi Badenoch accused Burnham of failing to say no to spending requests.