Burnham Stresses Fiscal Stability Ahead of Labour Conference

British Prime Minister Andy Burnham has said that demonstrating to investors a readiness to confront the reality of the public finances is essential to calming markets, and that this stability is a precondition for any larger economic programme.

Speaking to the Guardian before his governing Labour Party opens its annual conference, Burnham said it was crucial to show "a willingness to face up to the reality of some of these difficult things." Only from that foundation, he argued, could the government earn the permission to make bigger changes capable of strengthening the country's fiscal position.

"You have to have stability, but you have to do what you can within that," he said, adding that a major programme of change could not be pursued in a chaotic situation.

His remarks come as government borrowing costs across advanced economies have repeatedly touched multi-decade highs in recent weeks, driven by fears of persistent inflation linked to the Iran war and by rising government borrowing. Britain's costs have been pushed up further by market doubts over whether the new government can restrain spending, with attention fixed on its budget on October 28.

Burnham also indicated that support among Labour lawmakers for "crude cuts" to the welfare budget was "not there."

Since the March budget, higher borrowing costs and inflation have led some economists to estimate that the relatively narrow £24 billion of headroom against the government's budget goals has roughly halved, narrowing its room for manoeuvre. Investors, meanwhile, still recall the market turmoil triggered by former Prime Minister Liz Truss's mini-budget, which proposed £45 billion of unfunded tax cuts.