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\t\tBurnham has been warned against allowing for more borrowing.\t<\/p>\n\t\t\tThursday 10 September 2026 1:19 pm\n\t\t\t<\/p>\n
\t\tBurnham has been warned against allowing for more borrowing.\t<\/p>\n
Andy Burnham and John Healey have been warned against using an \u201caccounting trick\u201d to ramp up borrowing given the volatility shaking bond markets and traders\u2019 vigilance to extra gilt issuance.\u00a0<\/p>\n
Analysts at Oxford Economics said that it looked likely the government would use extra borrowing across bodies like the British Business Bank and the National Wealth Fund to fund a boost in infrastructure and housing investment.<\/p>\n
This would come via the use of so-called \u2018Pufins\u2019, which is short for public financial institutions, and allow additional borrowing to fall outside of the government\u2019s strict fiscal rules on debt and the budget balance.\u00a0<\/p>\n
The use of Pufins would mean that assets held by the state offset the costs of what is owed to investors on the government\u2019s balance sheet.\u00a0<\/p>\n
Economists at the consultancy said this workaround could be dangerous for public finances as higher long-term gilt yields due to a global bond market rout could cost<\/a> the government up to \u00a39bn more than previously expected.\u00a0<\/p>\n \u201cUsing an accounting trick to loosen policy in a significant way would be risky given the current febrile bond market backdrop,\u201d Oxford Economics researcher Andrew Goodwin said.\u00a0<\/p>\n \u201cAny extra borrowing must still be financed via higher gilt issuance.\u201d<\/p>\n Voters fear impact of surge in borrowing costs<\/p>\n Goodwin also warned that Pufins could \u201cthreaten the credibility\u201d of Healey\u2019s commitment to fiscal prudence amid a difficult economic backdrop. He also said the government\u2019s plan to reduce borrowing was \u201crelatively weak\u201d given much of the tax hikes announced by Rachel Reeves last year would only kick in later in Labour\u2019s term.\u00a0<\/p>\n Oxford Economics said higher UK energy policies, forced up by international oil prices skimming $100 per barrel due to the continuance of the Iran war, could add to economic troubles looming over Healey\u2019s first Budget.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tInvestors \u2018may be less than impressed\u2019 by John Healey\u2019s \u00a39bn borrowing plans\u00a0<\/a><\/p>\n An ongoing freeze on tax thresholds will also squeeze real household incomes, researchers said. The government has said it was prepared to announce further measures to ease cost of living pressure faced by families.\u00a0<\/p>\n He predicted that the Prime Minister would have to keep measures supporting households as \u201clow-cost\u201d and \u201clow-impact\u201d.\u00a0<\/p>\n \u201cSo far, markets have largely given the new administration the benefit of the doubt. But its first fiscal set-piece will send an important signal and a material loosening of policy would likely cause markets to react badly.\u201d<\/p>\n The government is currently projected to spend about \u00a3137bn on debt<\/a> interest payments in 2030, more than double what it spends on defence and higher than expenditure on education across the country.\u00a0<\/p>\n