Rachel Reeves just torpedoed UK – she’ll sink Andy Burnham the moment | Personal Finance | Finance
Andy Burnham will be smiling this morning as he uses his victory in the Makerfield by-election to unseat Sir Keir Starmer from 10th place. But he will not be happy when he sees today’s borrowing figures, which reveal the disastrous state of the public finances after almost two years of Labour. Reeves borrowed a staggering £23.3bn in May, well above forecasts. This is the highest May figure in history, excluding the Covid pandemic. And this comes at a time when the national debt has reached almost £3 trillion. The more we look at today’s numbers, the worse they get. Especially Burnham.
The King in the North is flying high today but could quickly find himself as unpopular as the current Prime Minister. At the 2024 general election, Starmer came to power on a wave of anger at the Conservatives, who left Chancellor Rachel Reeves with a terrible economic legacy. Unfortunately, almost everything he did while in power made the situation worse. And she’s about to shoulder an even more disastrous legacy than the one Burnham inherited. It could almost sink it before it even starts.
By May 2025, Reeves had borrowed £17.9bn. Despite repeatedly claiming to have restored stability to the public finances, it has managed to borrow a further £5.4bn this year. And this despite Britons paying a record £154bn in tax and National Insurance in May, a figure up £9.8bn on the previous year. Most of this borrowing doesn’t even finance new services. In May, the UK spent £11.7 billion paying down its national debt. Essentially, we borrow a small fortune to pay the interest on our existing debts. This is the road to bankruptcy.
Much of our £3 trillion debt was accumulated in the hands of Gordon Brown and successive Tory chancellors, but they also had the financial crisis and Covid on their hands. Reeves will blame the Iran war, but even with all those extra taxes he has conspicuously failed to get the budget deficit under control. In total, it is on track to borrow £140bn this year, possibly even more.
Reeves spends heavily on debt interest, utilities, investment projects and welfare. This is a huge blow for Burnham because she was hoping to do the same, only on a more heroic scale. Throughout his leadership bid, he makes expensive promises, from nationalization to social care to compensation for Waspi women. He also talked about wealth taxes, higher council tax, a new land tax and an inheritance raid.
In a moment of economic madness, he foolishly suggested that Labor should “move beyond the issue of being hostage to the bond markets”. There’s only one way to achieve this. Stop borrowing so much from them. But if Burnham is to deliver even half of his promises and keep Labor MPs happy, he will have to borrow even more.
Burnham is expected to fire Reeves when she comes to power. The most likely replacement is Ed Miliband. This must scare everyone. Its net zero charge is to destroy jobs and deindustrialise Britain. If Red Ed were given the right to manipulate the entire UK economy, it could end in disaster.
Bond investors are already worried about the possibility of a Burnham government. Gilt yields are rising as I write this. If markets lose confidence, the cost of servicing Britain’s mountain of debt will rise further. Burnham is a lovely man who loves to be loved. Rachel Reeves probably isn’t that keen and will give her a bad send-off. His economic legacy will devastate Burnham from day one. While he may seem unsinkable these days, the good ship could sink Miliband too.
