“We’ve got to get beyond this thing of being in hock to the bond markets,” he said on the eve of the party’s annual conference in Liverpool. He’s telling some Labour backbenchers and grassroots activists exactly what they want to hear. But they’re not the ones he needs to convince.
Labour backbenchers have been chuntering for months that Chancellor Rachel Reeves should break her own fiscal rules to borrow more, especially for an increase in defence spending. The Treasury has even run sessions on the bond markets to try to break the cycle of misunderstanding.
The Greater Manchester Mayor also called for the nationalisation of utilities. In another interview – with the Conservatives’ in-house paper, The Daily Telegraph, clearly chosen to wind up No 10 – he suggested higher taxes on the wealthiest.
The Treasury has repeatedly modelled wealth taxes, only to conclude that the cost of capital flight – wealthy investors deciding not to come to Britain or leave altogether – is higher than any surplus it would bring in. Experiments in Sweden, France, Ireland and Australia have all failed.
Burnham could find himself in the position of former Prime Minister Liz Truss, whose unfunded tax cuts so roiled the bond markets that interest rates went through the roof. Mortgage-payers are still suffering the consequences now.
Tory leader Kemi Badenoch already blames Reeves for high borrowing costs, calling it the “price of her economic mismanagement”. But the fact the bond markets don’t trust Labour is less to do with Reeves and more to do with No 10’s mismanagement of the Parliamentary Labour Party and subsequent failure to get the welfare cuts through the Commons.
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Britain’s high yields are tracking a general trend where investors are worried rich countries are taking on too much debt. Reeves has promised to reduce the deficit from 3.9 per cent of GDP this year to 2.1 per cent by 2029. Yet, despite a huge parliamentary majority, after the welfare debacle investors think she is less, not more, likely to succeed.
It’s fair to say Burnham’s intervention has caused some irritation among allies of Starmer. On Thursday, aides swapped messages about the Manchester Mayor’s “economic illiteracy”.
Burnham is not subtle. He said MPs are privately urging him to challenge Starmer and that “wholesale change” was required to see off an “existential” threat to the ruling party. For Labour’s lefty purists already in a jittery mood, this is catnip.
But Burnham’s leftward tilt also ignores the vast swathe of centrist voters who made up Labour’s broad election coalition: those persuaded to lend Starmer their vote on the basis of promises not to impose certain tax rises.
Now he’s telling some left-wing Labour MPs, the unions and grassroots exactly what they want to hear as they allow themselves a week of introspection at their annual conference. Look up over the sky in Liverpool this weekend and you might spot a green-faced Northerner on a broomstick, defying gravity.
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