Burnham has no scope to increase borrowing, think tank warns

📰 source: bbc_business · 💼 business

the national institute of economic and social research (niesr) warned that prime minister andy burnham has no room to increase borrowing to fund his pledges on defence and cost of living. the think tank said he must raise taxes or cut spending elsewhere. niesr cited persistent inflation driven by the iran war as squeezing public finances. it questioned whether burnham had fully thought through how to pay for his promises.

niesr's deputy director stephen millard said there is clearly no scope for increasing borrowing, so it's about choices. he suggested cost-of-living measures could be funded through higher taxes, possibly via tax reform rather than higher marginal rates, or spending cuts. he pointed to welfare, the pensions triple lock, council tax reform, or scrapping vat exemptions. niesr expects inflation to keep rising until february 2027, peaking at 3.8%, and does not believe the bank of england will cut interest rates until 2028. director david aikman said treading water is not enough to prevent national debt rising. the treasury said the government will stick to its fiscal rules while investing in public services.

why it matters: niesr warns burnham faces tough choices between tax hikes, spending cuts, or breaking manifesto promises, with inflation and debt rising.

source: bbc_business
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