Faisal Islam: Burnham seeks to calm markets by committing to fiscal rules

"Greater Manchester Mayor Andy Burnham has committed to sticking to the government's existing borrowing limits, known as its fiscal rules. And the markets appear to have reacted. In recent weeks, Burnham had suggested the rules might be changed, for example by exempting rises in defence spending, as has occurred in Germany, to allow for extra spending. Then on Friday, UK borrowing costs rose amid the possibility of him winning the Makerfield by-election and then a Labour leadership election, as well as global tumult."

"However, on Monday, the Burnham campaign confirmed to BBC News that changing the fiscal rules was no longer an option. A former minister and Burnham backer said: "He has committed to the rules as they are. It is totally essential. He understands the cost of borrowing is a huge constraint on government." That same day, UK 10-year gilt yield a measure of the effective interest rate on a 10-year loan to government fell back, something attributed to Burnham's attempt to calm markets."

"Bond market expert Mohamed El-Erian said: "These comments from Andy Burnham contributed to this morning's outperformance of the UK bond market. "It makes total sense to clarify his approach at this time of global bond market turbulence." On Monday, the International Monetary Fund urged the UK to stick to the fiscal rules which continue to shrink government borrowing faster than other major economies."

"The main fiscal rules limit how much the government can borrow to fund day-to-day public spending and compel the government to ensure that debt as a share of national income is falling by the end of the Parliament, expected in 2029. "There needs to be a plan to get debt down, but beyond that, we need to change politics and take the turbulence out of British politics because that is a cause of uncertainty that then has that impact in the markets.""

Greater Manchester Mayor Andy Burnham committed to maintaining the government’s existing borrowing limits, known as fiscal rules. He had previously suggested the rules could be changed, including possible exemptions for defence spending, but his campaign later confirmed that changing the rules was no longer an option. UK borrowing costs rose earlier amid uncertainty tied to potential political outcomes and global market turbulence. After the clarification, the UK 10-year gilt yield fell, attributed to efforts to calm markets. A bond market expert linked the improvement to Burnham’s comments. The IMF urged the UK to stick to the fiscal rules, which limit borrowing for day-to-day spending and require debt to fall as a share of national income by the end of the Parliament in 2029.

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