Burnham Pressed on Economy at First PMQs as UK Borrowing Costs Rise

Andy Burnham faced Kemi Badenoch at the despatch box for the first time on Wednesday, with the cost of government borrowing surging to levels not seen since 2007. The yield on a 10-year government bond reached its highest point since 2008, while the yield on a 30-year bond hit its highest level since 1998 — meaning the state faces rising long-term costs on the money it borrows, with potential consequences for the spending choices ahead of an October Budget.

Badenoch used the session to press the prime minister on the absence of detail behind his spending announcements, which had been unveiled during the summer recess. "The markets are clearly worried that we now have a spendthrift prime minister who wants to say yes to everyone but cannot tell us where the money is coming from," she said, demanding to know whether the government intended to raise taxes, increase borrowing, or cut spending. She argued the prime minister had not ruled out tax rises.

Burnham rejected the framing, saying his first moves in office had included cutting VAT on energy bills and reducing business rates for the hospitality sector. He declined to set out further Budget plans at the despatch box, stating that he and Chancellor John Healey had agreed an early October date for the Budget specifically to reduce speculation. He also blamed the previous Conservative administration for Britain's market exposure, saying the "turbulence on global markets are because of that exposure that they left behind".

O'Neill warning cited by both sides

Badenoch raised remarks by economist and cross-bench peer Lord Jim O'Neill, who had previously been tipped to become Burnham's chief economic adviser but publicly ruled out joining the government. Speaking to the BBC, Lord O'Neill praised the PM for "a great first five weeks" that had lifted consumer and business confidence, but warned that the spike in market interest rates would force the government to begin "dealing with the triple lock" on the state pension and what he described as "excessive" welfare spending. He also said the spike was "mostly mirroring US market upheaval concerning the Iran conflict".

Badenoch argued that Lord O'Neill had warned Burnham's Commons statement the previous day was "the last thing investors wanted to hear", pointing to the subsequent rise in borrowing costs as corroboration. Burnham responded that he and Lord O'Neill did "not always agree", before turning to Badenoch's weekend shadow cabinet reshuffle, which he said had removed a shadow chancellor who acknowledged the Truss mini-budget was a mistake and replaced him with one who had helped to write it.

"Can I also say to her and the whole of her new shadow cabinet, the majority of whom were part of a government that lasted for 49 days, a short-lived government that crashed confidence in the economy and hammered people's mortgages," Burnham said, to shouts of "point-scoring!" from the Conservative benches. Badenoch replied that the reason the Truss budget had failed was that "spending was announced before the money to pay for it, which is exactly what he is doing right now".

The prime minister, who took over from Sir Keir Starmer in July just before Parliament's summer recess, had spent more than three hours in the Commons on Tuesday, making a ministerial statement and answering MPs' questions. Wednesday's PMQs exchange offered the first direct, weekly reckoning between Burnham and Badenoch across the despatch box. Analysts tracking how the new prime minister would handle the session noted that rising gilt yields added an unusually sharp economic backdrop to his debut. The government said it would stick to its fiscal rules while seeking to ease cost-of-living pressures, though the path to achieving both simultaneously will be scrutinised closely as the Budget date approaches.