Burnham’s former economic adviser gives Budget a four out of 10

One of Andy Burnham’s former economic advisers has given John Healey’s Budget a four out of 10, warning there remained a 50 per cent chance the UK economy will be in worse shape next year than it is now. Andy Haldane, who for years served as chief economist at the Bank of England, told the BBC there was nothing in the Chancellor’s maiden fiscal event to reduce the “credibility gap this government faces” with the bond market and its concerns over Britain’s fiscal path.

“It was a Budget with a tincey bit more spending, a tincey bit more tax and nothing really that would give us any greater confidence that those debts and deficit could be brought down – if anything those deficits and debts were revised upwards” he said, adding: “We remain in a position of quite acute fiscal precarity.” Haldane was held up by some in Andy Burnham’s camp as one of three economic heavyweights helping shape the Prime Minister’s plans for government, though his involvement never evolved into a formal role.

Now, the president of the British Chambers of Commerce, he has since issued a string of rebukes over what he sees as the government’s unwillingness to tackle Britain’s perilous fiscal situation or unleash the private sector in its pursuit for growth. Speaking to the Political Thinking podcast, Haldane said the UK had been given a temporary reprieve by the fact the “markets’ spotlight is not on us”. “It’s focused across the Channel,” he added.

“France is ablaze when it comes to concerns about their debt and deficits […] Nonetheless it wouldn’t take much for that for that searchlight to cross the Channel onto our shores, and that’s why I wanted the Chancellor to put more insurance in place – to guard against that fire spreading across the Channel. The former Bank of England official gave Healey’s maiden fiscal event a four out of 10, on the grounds it failed to make sufficient inroads into protecting the public finances.

“I think this is around a four,” he said, adding: “John Healey plainly [on Wednesday] had sworn the Hippocratic oath before he gave his speech. It was a do-no-harm Budget and as best we could tell, people shrugged: businesses, consumers, financial markets. And given its predecessors, maybe we should thank heavens for those small mercies.” Healey avoids bond market backlash in Budget The Chancellor managed to avoid any immediate political or market fallout from his first Budget on Wednesday, which included the largest number of individual announcements in history but the smallest overall change to the overall fiscal picture in several years.

Headline measures included a £2.4bn energy support package restricted to households in council tax bands A to D and a temporary windfall tax on the UK’s banks. Government bond yields fell during Wednesday’s trading, in a sign of investor relief at the package. In the aftermath of the announcement, fixed income traders cheered Healey’s commitment to his predecessor’s fiscal rules and an absence of any inflationary or unfunded spending measures.

But gilt yields remain the highest of any G7 economy, amid concerns over the UK economy’s slow growth, high debt and vulnerability to inflation. Haldane said the government would have enjoyed a sharper and more sustained drop in its borrowing costs, if Healey oversaw a concerted effort to bear down on public spending. He told the BBC: “Had the Chancellor… stood up and surprised the markets – and probably me as well – and done a first instalment to get pulic spending under control, I think he would have been rewarded handsomely by the market in lower borrowing costs; not just governments, by the way, but also for mortgages and indeed for businesses.”

The Treasury was approached for comment.