Andy Burnham faced intense scrutiny during his first Prime Minister’s Questions session as rising UK government borrowing costs prompted debate over the country’s fiscal path. The cost of borrowing hit its highest level in nearly two decades, with 10-year government bond yields climbing to their highest point since 2008. This increase comes amid ongoing global economic uncertainties, including inflationary pressures and geopolitical risks such as the conflict in Iran.

Burnham attributed the current market turbulence largely to the economic legacy left by previous Conservative governments. He criticised their record, highlighting 14 years of stagnant growth and rising debt as a percentage of GDP. The prime minister argued that these factors had left the UK vulnerable to financial shocks. In response to questions about potential tax rises, Burnham said his initial measures had included tax cuts, referencing recent reductions in VAT on energy bills, but he refrained from ruling out future tax increases ahead of the autumn budget scheduled for late October.

The Conservative leader, Kemi Badenoch, countered Burnham’s claims by accusing him of fiscal irresponsibility. She warned that his government’s promises risked further borrowing and higher taxes, describing him as a “spendthrift” unable to specify funding sources for new commitments. Badenoch drew comparisons with the financial turmoil following Liz Truss’s short-lived premiership and her “mini-Budget,” arguing that present borrowing costs now exceed those seen during Truss’s tenure. She criticised Burnham’s lengthy Commons statement earlier in the week for failing to reject any spending demands and said a prime minister must show leadership rather than seek to appease all parties.

Economic experts have linked rising borrowing costs to a combination of factors, including a surge in oil prices and investor concerns over the government’s fiscal direction. Some analysts suggested that Burnham’s emphasis on increasing public control of utilities contributed to market unease, although this was not seen as the sole cause. Lord Jim O’Neill, a close adviser to Burnham and former economist at Goldman Sachs, remarked that investors are wary of the country’s debt trajectory and called for “credible action” on spending, including welfare reforms. O’Neill warned that escalating debt servicing costs could pressure the government into making tough fiscal decisions.

Burnham, for his part, pledged fiscal discipline and insisted that the government is committed to balancing support for households with responsible financial management. He highlighted that borrowing had fallen to its lowest level in six years in the first half of 2026 and that the UK was leading the G7 in deficit reduction. However, he stopped short of committing to avoid tax rises or spending cuts in the forthcoming budget.

The rising cost of debt interest poses a significant challenge for Chancellor John Healey ahead of the budget announcement, limiting fiscal flexibility against a backdrop of increased inflation and geopolitical uncertainty. Economic commentators predict that maintaining the government’s financial commitments without further tax or spending adjustments will be difficult in the current market environment.