Andy Haldane, former Bank of England chief economist and ex-adviser to Prime Minister Andy Burnham, has expressed concerns that Chancellor John Healey’s upcoming Budget will prioritize satisfying Labour backbenchers rather than supporting business growth or reassuring financial markets. Speaking ahead of the Budget announcement scheduled for next week, Haldane warned that planned tax increases and additional government borrowing could undermine economic growth and deter investors.

Haldane, who declined a formal role in Burnham’s administration, criticized Labour’s ambition to expand the state amid a fragile fiscal environment. He pointed to the risk that a larger public sector, coupled with rising borrowing, might shake investor confidence and push up borrowing costs. Haldane emphasized the importance of fiscal discipline, suggesting that maintaining a robust budgetary buffer would signal a readiness to curb public spending, thereby stabilizing market expectations.

“My hope is this is a Budget for business and bond markets,” Haldane said. “In other words, the Government signals voluntary restraint on spending and chooses not to raise taxes on households or businesses. That would be the best thing to get growth going. That is my hope. It is not my expectation.” He anticipated the government would pursue further borrowing and tax hikes, measures he considered detrimental to economic expansion.

Highlighting growing tensions within the Labour Party, Haldane noted pressure from the party’s left wing for increased public spending. However, despite recent indicators suggesting the UK economy has outperformed forecasts, he cautioned that rising living costs and government borrowing could complicate the outlook going forward.

Haldane also criticized rumored plans for a tax increase targeting the banking sector, warning such measures could disincentivize investment. “A world in which the taxman takes the upside and investors take the downside is not an environment where investors will want to invest more money,” he remarked.

In contrast, Haldane expressed support for Conservative proposals aimed at boosting growth through spending cuts, tax reductions, and deregulation. He called for “cuts to business and employment taxes and regulation to unleash animal spirits,” alongside slimming government expenditure to reduce borrowing costs.

As debate over the Fiscal Strategy intensifies, Conservative politicians have urged Healey to tackle rising inflation, with official data expected to show an increase from 3.1 percent in August. This inflation rate is a key factor in determining social welfare benefit rises, which the Conservatives warn could drive welfare spending up by £4 billion next year. The Budget will be closely scrutinized for its impact on economic stability and public finances amid these challenges.