Andy Burnham's plan to establish fiscal credibility with financial markets has collapsed, as two of his three chosen advisors have distanced themselves and the third remains silent.
Three Wise Men Plan Falls Apart
Burnham had assembled three leading financial experts to bolster his economic credentials: Jim O'Neill, former Goldman Sachs chief economist; Andy Haldane, former Bank of England chief economist; and Richard Hughes, former chairman of the Office for Budget Responsibility.
Lord O'Neill has confirmed he will not take a formal role in Burnham's government, citing the need to hand over his financial affairs to avoid conflicts of interest. Policy differences have also emerged, with O'Neill publicly opposing Labour proposals for a wealth tax or capital gains tax hike.
Haldane Rejects Tax Plans
Haldane has also effectively ruled out joining, having criticised Labour's tax increases in the Financial Times and called for a three-year moratorium on further tax rises and spending pledges.
Richard Hughes, the third advisor, has not commented publicly, though he was previously forced to resign after being blamed for Rachel Reeves' Budget leaks.
Market Pressure Mounts
The setbacks come as global markets face significant strain, with US debt near $40 trillion and UK debt close to £3 trillion. The Office for Budget Responsibility has warned that public debt is on an unsustainable path.
Burnham has made £1.5 billion in spending pledges since becoming PM, while needing £4.7 billion for defence and up to £18 billion for social care reforms. UK borrowing reached £1.8 billion in July, with welfare spending up 7.2% over the past year.
Ten-year gilt yields have risen above 5% amid the Iran war, increasing the cost of borrowing. With one advisor departed, one publicly critical, and the third staying quiet, Burnham's credibility effort has unravelled.
