Burnham told he must raise taxes or cut spending in budget

By the Editorial Team · Wednesday, September 16, 2026

Andy Burnham faces a worsening public finances outlook requiring around £10 billion in tax hikes or spending cuts in his upcoming budget, as the Office for Budget Responsibility begins a crucial economic assessment. The results of this review will heavily influence government borrowing costs and fiscal policy decisions amid mounting economic pressures from global conflicts and rising oil prices.

Andy Burnham is confronting a substantial deterioration in the public finances that is projected to require approximately £10 billion in either tax increases or spending cuts in his forthcoming budget. The Office for Budget Responsibility (OBR), the independent fiscal watchdog, has begun its critical ten-day assessment period to evaluate the current economic outlook. This analysis will inform the calculation of government debt interest costs, which are fundamental to budget planning.

A senior government source described the timing of the OBR review as “hugely challenging” for Chancellor John Healey, particularly given the economic repercussions of the ongoing war in Iran. Rising oil prices and extended geopolitical uncertainty have contributed to an increase in government borrowing costs, recently reaching their highest level in nearly two decades.

Economists and fiscal experts suggest that the government may have limited options, making tax increases or public spending reductions nearly unavoidable. The government’s fiscal "headroom"—a financial buffer allowing for unforeseen expenditures—has reportedly diminished from an initial £23 billion to approximately £5 billion once commitments linked to cost-of-living support measures are accounted for.

In public remarks, Healey has indicated his intention to retain a budgetary buffer to manage potential economic uncertainties, signaling caution to financial markets.

Among voices within the economic community, former Bank of England economist Andy Haldane, a supporter of Burnham, warned against tax rises. Speaking to a radio audience, Haldane criticized the government’s perceived approach, stating that markets view it as a “traditional tax-and-spend socialist government with better TikTok videos.” He highlighted an ongoing reluctance or inability by the administration to implement meaningful spending cuts, which he identified as a key vulnerability.

As the government prepares its first budget under Burnham’s leadership, balancing fiscal responsibility against economic pressures, including global conflicts and domestic commitments, will be a significant challenge. The forthcoming OBR report is expected to shape the contours of fiscal policy for the year ahead.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.