Andy Burnham has warned that "difficult decisions" lie ahead in next month's Budget after official figures showed UK inflation rising to 3.1% in the year to August, up from 2.9% the month before. Speaking during a visit to Woking, he blamed instability in the Middle East for pushing up prices while insisting the economy remained "resilient," and said Chancellor John Healey would apply the "highest degree of prudence" when setting the Budget. The comments came as Burnham faced pointed criticism from his former economic adviser Andy Haldane, the ex-Bank of England chief economist, who accused the government of behaving like "a traditional tax-and-spend socialist government with better TikTok videos" and warned that markets would keep pushing up borrowing costs unless spending is cut.

The Chancellor's fiscal "headroom" is reported to be shrinking as government borrowing costs climb, with UK bond yields at 28-year highs and some analysts estimating Healey may need to find around £10 billion through tax rises or spending cuts. Oil prices remain elevated, with Brent Crude near $108 a barrel and diesel at a four-year high, while energy bills could rise by as much as a quarter in January; some forecasters believe inflation could reach 4% next year. The Bank of England's Monetary Policy Committee, which targets 2% inflation, is due to announce its latest interest rate decision, with rates widely expected to be held at 3.75%.