Jim O’Neill urged bolder investment-backed borrowing and more transparent infrastructure scoring, adding to debate over whether a Burnham government might revisit fiscal constraints despite market sensitivities.
Britain’s bond market remains a major constraint on Andy Burnham, described as the country’s likely next prime minister, as investors weigh whether he can maintain fiscal discipline while tackling weak growth, infrastructure needs and a £4.7 billion defence funding gap. Burnham has pledged to keep the government’s existing fiscal rules, but economist Jim O’Neill, who has been advising him, said fiscal credibility should not be judged by a single rulebook and urged policymakers to be bolder on investment-backed borrowing. O’Neill said governments can become trapped by manifesto promises and rigid borrowing limits, arguing that credible action on Britain’s deep-seated problems could ultimately win market support even if existing constraints were revisited. He also said the recently created National Infrastructure and Service Transformation Authority should publicly assess infrastructure projects, with that analysis feeding into the Office for Budget Responsibility’s long-term forecasts. The intervention adds to an existing market debate over whether Burnham would stick strictly to current rules or eventually soften them. UK gilt yields remain the highest in the G7 despite a recent rally tied to lower oil prices and easing fears over energy flows through the Strait of Hormuz. Analysts say investors will continue watching Burnham’s choice of chancellor and any signals on tax, spending, infrastructure investment or fiscal-rule changes when government returns in September.