Haldane warns Burnham on ‘tax-and-spend socialists with better TikTok videos’
Former Bank of England chief economist Andy Haldane has warned Prime Minister Andy Burnham that markets believe he is presiding over a “traditional tax and spend socialist government with better Tiktok videos”.
Haldane, who advised Burnham before he returned to Westminster earlier this year, said the government’s “Achilles’ heel” was its inability to cut public spending.
The top economist, who is now president of the British Chambers of Commerce, said investors and markets had retreated to worrying about the UK’s public debt load.
“The fiscal Achilles’ heel of this government thus far has been its unwillingness and-or inability to cut public spending,” he told LBC.
“Within financial markets, we’ve gone from the cautious optimism of the summer months to the studied skepticism of September.”
“The market now suspects that this is a traditional tax-and-spend socialist government with better Tiktok videos.”
Haldane doubled down on his calls for the government to consider replacing the triple lock pension, echoing remarks made in am interview with City AM in the summer. Then, Haldane suggested the “vast majority of people” agreed the uprating mechanism on the state pension, which could cost the government up to £40bn more a year by 2050 per Institute for Fiscal Studies calculations, needed to be addressed.
“Truth be told, when the triple lock came in, pensioner poverty was sky-high and it’s done its work,” he said at the time. “That’s been beaten back to a relatively low level. If not now, when?”
Burnham and Healey’s headroom headache
In his remarks to LBC, the top economist said other spending areas such as the NHS or improving productivity across the public sector would get Burnham and Chancellor John Healey “instant credibility”.
The cuts could also “almost pay for itself as a growth dividend” and reduce borrowing costs, he added.
Haldane’s comments deliver a hammer-blow to Burnham after it was widely reported that the former Bank of England economist was acting as an adviser to him. City AM revealed in August that Haldane had not taken any official role.
Economists have calculated that a rout in bond markets could knock as much as £9bn off Healey’s £23.6bn headroom.
Forecast revisions on migration and growth could further erode the buffer against the fiscal rules, which state government receipts should match day-to-day spending in the third year of the fiscal forecast.
The Resolution Foundation has suggested that the size of the headroom could be in the single digits.
According to The Times, Healey may aim for a fiscal buffer of around £15bn. The Chancellor is also tasked with finding more cash to spend on defence and supporting households with the cost of living.