Burnham has no scope to increase borrowing, think tank warns
The National Institute of Economic and Social Research has warned Prime Minister Andy Burnham that he must raise taxes or cut spending to fund his new cost-of-living and defense pledges. The think tank noted that borrowing is not a viable option due to persistent inflation linked to the ongoing conflict in Iran.
Why it matters
This highlights the fiscal constraints facing the new UK government as it attempts to balance manifesto promises against a challenging macroeconomic environment.
Image source, TOBY MELVILLE / Getty Images Image caption, Prime Minister Andy Burnham has announced a rake of cost-of-living measures since taking office last week
Prime Minister Andy Burnham will have to raise taxes or cut spending to meet his pledges on defence and the cost of living, a major think tank has said.
Burnham has announced a series of new measures since assuming office last week, including cuts to electricity bills and bringing the bus fare cap in most parts of England back down to £2 .
But the National Institute of Economic and Social Research (Niesr) warned the public finances will continue to be squeezed by more persistent inflation as a result of the Iran war.
It questioned whether Burnham had "fully thought through" how his promises would be paid for, but said the prime minister will have to raise taxes or cut spending elsewhere.
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