Markets raise UK borrowing costs after Burnham renationalisation plans
Daily Mail columnist Alex Brummer warns that Prime Minister Andy Burnham risks triggering a repeat of the market turmoil seen under Liz Truss, after a Commons speech outlining plans to reverse Thatcherite reforms, avoid "crude cuts" to welfare and pursue "relentless" renationalisation of utilities such as water and energy. The article argues that bond markets have already reacted badly, pushing UK borrowing costs sharply higher and reviving talk of a Labour "moron premium" reminiscent of the one that helped end Truss's premiership in 2022.
The piece notes that the yield on ten-year UK gilts rose to 5.29 per cent, the highest since the 2008 financial crisis and above levels reached under Truss, while 30-year gilt yields hit 5.92 per cent, a level not seen since 1998. Brummer contrasts this with other G7 nations, saying UK yields are far higher than America's 4.79 per cent and France's 4.22 per cent, and credits Thatcherism and Brexit with prior economic gains that he says Burnham's approach threatens to undo.
- Columnist accuses PM Burnham of reviving a Truss-style "moron premium"
- UK ten-year gilt yields hit 5.29%, highest since 2008 crisis
- UK borrowing costs now exceed other G7 nations, article claims
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of the Prime Minister's approach argue that decades of privatisation have left essential services such as water and energy under-invested, poorly regulated and geared towards shareholder returns rather than public need, so bringing them back under public ownership is a legitimate democratic choice with a clear mandate. They contend that bond market jitters are a short-term reaction that markets have overcome before, and that protecting welfare recipients from "crude cuts" reflects a reasonable judgement that social stability and household demand matter as much as headline borrowing costs. On this view, a government should not be permanently constrained by bond traders from pursuing structural reform its voters elected it to deliver, and comparisons to Truss overstate the risk given the different fiscal context.
The case against
Critics warn that sharply rising gilt yields are not an abstract signal but a direct, measurable cost that will raise mortgage rates, increase debt-interest spending and squeeze the public finances for years, regardless of the merits of renationalisation in principle. They argue that investors are pricing in genuine uncertainty about how ambitious nationalisation and looser fiscal discipline will be funded, and that Britain, already paying more to borrow than America or France, cannot afford to test market confidence given its debt burden. For this camp, the lesson of 2022 is that credibility with lenders is a precondition for any government's policy programme, and that ignoring market signals risks a self-defeating spiral of higher borrowing costs, tighter household budgets and less room for the very public investment reformers want to fund.
Business Government Markets Politics World
Read the full article at the source →
Originally published by Daily Mail as “If Burnham doesn’t wake up to Labour’s ‘moron premium’, the markets will sweep him from power as speedily as he arrived: ALEX BRUMMER”.