Economists Warn Burnham: Raise Taxes or Cut Spending
Economists Warn Burnham: Raise Taxes or Cut Spending
The News
British Prime Minister Andy Burnham is being warned by economists that he will have to raise taxes or cut spending in his first Budget, after figures released Wednesday showed UK inflation rising to 3.1%.
Burnham said he is ready to take the "difficult decisions" required to keep the economy on track, according to Reuters.
The Budget is set for October 28.
The Numbers
Inflation rose to 3.1%, the Daily Mail reported.
The government's fiscal headroom — the buffer it holds against economic shocks — has fallen from £23 billion to around £5 billion, according to The Independent.
Timeline
UK inflation data published in the morning shows a rise to 3.1%, fueling speculation about what Burnham will do in his first Budget. Burnham says he will take the tough decisions needed to keep the economy on track.
The date set for the Budget.
Reactions
Burnham pointed the finger at "Middle East chaos" for the pressure on prices while insisting the UK economy remained "resilient," the Daily Mail reported.
A former Bank of England chief jibed that Burnham is another "tax and spend socialist," according to the same report.
Economists cited by The Independent delivered a starker message: with the fiscal buffer largely gone, tax rises or spending cuts are the only routes left.
What's Next
Burnham's first Budget lands October 28, and it will show whether he closes the gap with tax increases, spending cuts, or both.
Until then, expect the speculation Reuters described to keep building around every new inflation and borrowing figure.
Poll
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