Greater Manchester Mayor Andy Burnham has indicated he would prioritize transforming the UK's social care system if he became Prime Minister, criticizing Westminster's reluctance to address difficult policy issues. He proposes accelerating the Casey review and exploring funding mechanisms like a 'care levy' to address the crisis.
Andy Burnham has abandoned plans to alter UK fiscal rules, which limit government borrowing. This decision comes amid global market volatility and rising UK borrowing costs, with Burnham aiming to reassure markets and reduce political uncertainty.
Andy Burnham has confirmed he will not change the UK's fiscal rules, despite suggestions he might exempt defence spending. His campaign stated this option is no longer available, aiming to calm markets amid global turmoil and rising borrowing costs.
Rolling coverage of the latest economic and financial newsStarmer on the brink as cabinet ministers urge him to quitNewsflash: UK government borrowing costs have risen at the start of bond market trading.Political uncertainty is gripping the markets, after Keir Starmer was urged to set out an orderly timetable for his departure ahead of this morning’s cabinet meeting.The market’s main concern here, and the reason for this Gilt underperformance, is twofold – firstly, that a new PM would shift to the left, and loosen/scrap the UK’s current fiscal rules; and, secondly, that doing so would exacerbate the UK’s inflation problem.With political uncertainty likely to persist for a while, and the fiscal rhetoric only set to ramp up, those considering buying the dip in Gilts may be minded to wait a while. Continue reading...
Rolling coverage of the latest economic and financial newsStarmer on the brink as cabinet ministers urge him to quitGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.Another UK political crisis is looming over the City of London today, as prime minister Sir Keir Starmer faces more calls to set out a timetable for his departure.With a Cabinet meeting expected this morning, today could be a big day in determining Starmer’s future.In response to the uncertainty, 10-year UK gilt yields rose +8.6bps to 5.00% yesterday, whilst the 30-year yield rose +9.3bps to 5.67%, given expectations that a new Labour leader may face pressure to ease the fiscal rules and raise gilt issuance. Continue reading...
Rolling coverage of the latest economic and financial newsUK goverment borrowing costs have risen at the start of trading, lifted by inflation concerns and uncertainty over Keir Starmer’s future.The yield, or interest rate, on UK 30-year bonds is up around six basis points (0.06 of a percentage point) at 5.63%.The triggering of a leadership election, and a subsequent change in Prime Minister, leaves the GBP [the pound] and Gilts [UK government bonds] not only grappling with a ratcheting up of political uncertainty, but also being forced to face up to a likely more left-wing successor to Starmer.Such an outcome would, in all likelihood, lead to a substantial loosening of the ‘fiscal rules’, along with considerably higher government spending, and even higher taxes, possibly even including a manifesto breach in raising NI, VAT, or income tax. Continue reading...
Rayner and Burnham are trying to gain markets’ confidence amid concerns they could loosen fiscal rules if they replace StarmerWho calls the shots on the bin collections in Sunderland, potholes in Hackney, or schools in Cardiff is not normally of interest to City traders in the multitrillion-pound sovereign bond market.But for those dealing in UK government debt, Thursday’s local and devolved government elections are significantly more important than usual, amid speculation that a dire showing for Keir Starmer’s Labour party could topple him as prime minister. Continue reading...
A House of Lords committee has urged Chancellor Rachel Reeves to aim for a significantly larger fiscal buffer, warning that the UK's public debt is on an unsustainable trajectory. The committee's report says the current £22bn headroom remains at historically low levels compared with the £30bn average between 2010-2022, and calls for larger buffers to become the norm to avoid destabilising policy changes.
Italy's deficit of 3.1% in 2024 exceeded the EU's 3% threshold by 0.1 percentage points, keeping Rome in the Excessive Deficit Procedure. The European Commission is unlikely to let Italy exit the EDP in its June assessment, dealing a blow to Meloni's government ahead of a sensitive election year. Surging oil prices from the Middle East conflict have forced Italy to downgrade growth estimates and increase spending to shield households from energy costs, further complicating fiscal consolidation.
