Britain has had six prime ministers in a decade, and Andy Burnham is increasingly likely to become the seventh. But whoever takes charge inherits the same grinding economic challenges that have driven political instability: stagnant living standards, scarce job opportunities, and public services stretched to breaking point.
Burnham has pledged to revive the economy while sticking to the current government’s borrowing rules — borrowing only to invest, not for day-to-day spending, and reducing debt as a share of the economy within a few years. Before the US-Israel war with Iran, Chancellor Rachel Reeves had calculated £24bn of headroom against her fiscal targets. But much of that buffer has since been eroded by the conflict.
“Andy Burnham, likely next PM, faces economic stagnation and union pressure to block Ed Miliband as chancellor.”
The next prime minister’s room for manoeuvre is tight. Interest repayments on national debt now consume one in every £10 the government spends. Even the plans Burnham has hinted at — boosting investment, focusing on skills, and taking more state control of utilities to lower bills — could easily exceed the available wiggle room. He could tweak the fiscal rules, perhaps winning bond-market sympathy for investment-led borrowing if it promises higher growth. Alternatively, he could raise money through taxes or cuts elsewhere.
Growth remains the overriding priority. Between 1990 and 2007, the average person’s living standards rose by roughly 2.5% every year. Since then the rate has halved, leaving households thousands of pounds worse off than they might have been. A lack of public and private investment during the years of austerity and after Brexit has sapped productivity and prosperity; the disruption of Covid and soaring energy prices compounded the damage. Food prices alone have jumped 40% in just a few years.
While Burnham grapples with these economic headwinds, he is also facing pressure from two major unions — Unite and the GMB — who are combining to try to stop Ed Miliband becoming chancellor. The move underscores the tensions that will confront a Burnham government even as it prepares to take office.
Burnham’s ambitions may yet be thwarted by financial reality. His pledge to stick to the existing rules shows he is wary of unsettling the bond markets. But with the public’s patience worn thin by years of stagnant pay and underpowered growth, the next prime minister will have little time to deliver the change voters expect.