Andy Burnham defends economic approach amid market concerns

Andy Burnham has insisted he is prepared to take "difficult decisions" on the economy, after a former Bank of England chief economist said investors were worried about his willingness to cut spending.

Andy Haldane, who has advised Burnham on the economy, claimed financial markets had grown wary of his economic plans and now considered his premiership a "traditional tax and spend socialist government".

But the PM rejected this, adding that he would not take risks with the economy and had already made difficult choices since taking office.

It comes as recent rises to the cost of UK borrowing worsened the political options facing the government ahead of next month's Budget.

Haldane said the prime minister's was facing a "straight choice" between raising taxes and cutting spending at the yearly spending statement due on 28 October.

In an interview with LBC on Tuesday, he urged him not to raise taxes further, but said investors were questioning whether he was prepared to risk anger from Labour backbenchers by making reductions in public expenditure.

"The fiscal Achilles Heel of this government thus far has been its unwillingness and/or inability to cut public spending," he told the radio station.

"Within financial markets, we've gone from the cautious optimism of the summer months to the studied scepticism of September. The market now suspects that this is a traditional tax and spend socialist government with better TikTok videos."

Speaking during a visit earlier on Wednesday, Burnham conceded that next month's Budget would be "challenging", blaming the "situation in the Middle East" for rising inflation in recent months.

But he rejected Haldane's characterisation of how markets viewed the government, telling broadcasters: "That doesn't tell the story. We are not that."

He added he had already taken difficult decisions on public spending, including "reprioritising" some government spending over the summer to pay for his early cost of living announcements, and scrapping the rollout of digital ID.

He added: "So it's not the case that we aren't going to take difficult decisions. We will take difficult decisions to make sure the economy remains on track."

Burnham said government efforts to lower living costs would "need to continue", adding that rises to inflation were a "concern". He is facing pressure from unions to hike taxes on banks to subsidise energy bills for poorer families.

Speaking from its annual conference, Trades Union Congress (TUC) boss Paul Nowak said the policy would help Labour send a message to voters that it was "on your side".

"We've got millions of households up and down this country who are going to be worried about their energy bills and they'll be looking to his government to drive a new economic direction," he added.