Expect a Budget for backbenchers, not business or bond markets, Burnham’s old aide warns

Andy Haldane, a former Bank of England chief economist and adviser to Andy Burnham, expects John Healey’s Budget to prioritise Labour backbenchers over businesses and bond markets. He warned that tax rises and more borrowing could weaken growth and deter investment, at a time when the Government faces pressure to spend more.

Haldane said the economy had performed better than expected but that rising living costs and borrowing could make conditions harder. He argued that leaving only £15 billion of fiscal headroom would be short-sighted, and said a larger buffer could reassure markets and lower borrowing costs. He favoured Conservative proposals to cut spending, taxes on businesses and employment, and regulation; inflation was expected to rise from August’s 3.1 per cent, potentially increasing welfare costs by £4 billion.