Britain reports tensions between Burnham and Healey teams over the economy
In the United Kingdom, there are tensions between the team of Prime Minister Andy Burnham and Chancellor John Healey over the pace and scale of economic changes, The Guardian writes. Burnham promises large-scale reforms, including stronger state control over utility companies, reform of the social care system, and mass construction of social housing. Healey, meanwhile, emphasizes fiscal responsibility and adherence to the budget rules of his predecessor Rachel Reeves.
Pressure on the budget
The situation ahead of Healey's first budget has been complicated by a global bond sell-off. It was driven by concerns over oil prices, persistent inflation, and pressure to increase defence spending. According to the publication, this has raised the cost of government borrowing to its highest level since the 2008 financial crisis.
Economists believe that about half of the £24 billion fiscal buffer that Rachel Reeves created in the spring forecast has already been eroded by higher inflation and interest rates. This significantly narrows Healey's room for manoeuvre.
A source at the Treasury told the publication that the chancellor is inclined to maintain stability while the Office for Budget Responsibility conducts its assessment. According to the source, this cautious approach does not fully align with Burnham's plans for the first week after parliament returns from its summer recess.
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Decentralization and investment
The prime minister's team insists that investment in infrastructure and the transfer of powers to the regions are needed to accelerate economic growth. A report by consultancy Mandala Partners states that applying Manchester's experience in other parts of England could potentially unlock economic potential worth up to £80 billion.
The study's authors described the decentralization of powers in housing, transport and healthcare as important. According to their calculations, an £8.5 billion public venture capital programme for mayor-led strategic authorities could help create almost 100,000 additional homes, attract more than £20 billion in private investment, and support over 70,000 jobs.
Healey has privately acknowledged the possibility of moderate additional borrowing for investment. His upcoming speech on the government's economic growth mission is expected to focus on decentralization, public investment, and the need to give the private sector confidence to invest. Government officials assure that the chancellor supports the prime minister's programme, although they acknowledge tensions between different parts of the government.
