ECONOMIST ANDY HALDANE WARNS BURNHAM OVER SPENDING CUTS

Andy Haldane, a former Bank of England chief economist, has warned Prime Minister Andy Burnham that markets believe his government is "a traditional tax and spend socialist government with better TikTok videos." He made the comments on LBC. Haldane said the government's "fiscal Achilles' heel" is its "unwillingness and/or inability to cut public spending." He said investor sentiment has shifted from "cautious optimism" in the summer months to "studied scepticism" in September.

Haldane, now president of the British Chambers of Commerce, previously advised Burnham on economic policy before Burnham returned to Westminster and became Prime Minister. He repeated calls, first made in the summer, for the government to consider replacing the triple lock mechanism that increases the state pension. According to Institute for Fiscal Studies calculations, the triple lock could cost the government up to £40bn more a year by 2050. Haldane has said pensioner poverty was "sky-high" when the triple lock was introduced but has since fallen to a "relatively low level".

Haldane said cutting spending in areas such as the NHS, or improving productivity across the public sector, would give Burnham and Chancellor John Healey "instant credibility" with investors. He said such cuts could "almost pay for itself as a growth dividend" and help lower government borrowing costs. One report described the remarks as a setback for Burnham, noting Haldane had been widely reported as an adviser to the Prime Minister. UK government bond yields have reportedly reached their highest level in 28 years ahead of next month's Budget, with Haldane saying "a few hard choices" are looming ahead of that statement.