Stories

Tue, 28 Jul 2026

Tue, 28 Jul 2026 Burnham has no scope to increase borrowing, think tank warns

The Prime Minister has announced a series of cost-of-living measure since taking office but is facing questions about how he will fund them.

* Prime Minister Andy Burnham's cost-of-living measures will need to be funded through higher taxes or spending cuts, a think tank has warned.
* The National Institute of Economic and Social Research (NIESR) says Burnham will have to raise taxes or cut spending elsewhere to meet his pledges on defence and the cost of living.
* NIESR's deputy director for macroeconomics, Stephen Millard, said there is "no scope for increasing borrowing" and that costs-of-living measures should be funded through higher taxes or spending cuts.
* Options for funding costs-of-living measures include: + Higher taxes (although Labour's manifesto pledge was to not increase taxes for working people) + Spending cuts in areas such as the welfare bill, the triple lock on pensions, and council tax + Reforms to VAT exemptions + A land value tax system
* NIESR also expects inflation to keep rising until February 2027, peaking at 3.8% before falling back to the Bank of England's 2% target.
* The think tank says that the central bank will not cut interest rates until 2028.
* The Treasury has said that the government will stick to its fiscal rules while investing in public services.