Britain is on 'thin ice,' warns ex-Bank of England chief economist — and it must act to 'appease financial markets' — SkimNews
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- Andy Haldane, former Bank of England chief economist, told CNBC the UK is "skating on pretty thin ice" fiscally and faces "perils" ahead of the Autumn Budget scheduled for Oct. 28
- Haldane said the "single most effective way" to prevent the ice cracking is for the government to "appease financial markets" by showing willingness to "take the knife to public spending"
- Britain now has the highest government borrowing costs in the G7, with gilt yields surging amid domestic and global instability
- Haldane argued the UK is "a leveraged bet on the world economy" with inflation that is "higher and stickier" and growth that is "lower and stickier," having "yet to balance the books this century"
- Andy Burnham, who replaced Keir Starmer as prime minister over the summer, saw his emergence as frontrunner to oust Starmer rattle bond markets earlier this year; Haldane called his push to end the triple lock pension mechanism a "good first instalment" but flagged welfare as a "totemic issue"
- Reports suggest windfall taxes on banks are on the table; JP Morgan's Jamie Dimon met with Burnham and finance minister John Healey in London last month to lobby against the proposal
- Haldane warned the private sector is "taxed out" and said the current government is "significantly underweight in its economic and financial expertise"
Why it matters: The UK already carries the highest borrowing costs in the G7, and any sign the government flinches on spending — or leans on bank windfall taxes that JP Morgan is already fighting — risks pushing gilt yields higher, squeezing an economy with the G7's stickiest inflation and weakest growth ahead of Oct. 28.
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