The incoming Prime Minister has been warned of potential economic ‘volatility’ if he fails to do one thing after entering Number 10.
Andy Burnham is expected to formally become Prime Minister next week (Image: Getty)
Incoming Prime Minister Andy Burnham has been issued a warning by a major international organisation amid public spending fears. The MP for Makerfield, who will formally replace Sir Keir Starmer in No 10 on Monday, was urged to take a “cautious approach” to the country’s finances to avoid economic “volatility”.
The Washington-based International Monetary Fund (IMF) published the advice in a new report days before Mr Burnham begins his premiership. It told him to be “very selective in accommodating new demands” and to “stick to the deficit reduction plan” spearheaded by Chancellor Rachel Reeves. Ms Reeves has appeared to concede that she will not stay on in the role under Mr Burnham, however, with her replacement unclear, creating uncertainty around the incoming Government’s economic priorities.
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Rachel Reeves is not expected to remain Chancellor in an Andy Burnham Government (Image: Getty)
The IMF report called on Mr Burnham to focus future spending reviews on “reallocating resources across departments rather than increasing total spending” and maintain a response to the Iran war energy shock that is “tightly targeted, temporary and budget-neutral”.
This would mean avoiding universal support schemes like that introduced after the 2022 energy crisis, which capped annual energy bills for the typical household at £2,500.
“Broad-based measures, such as cuts in energy taxes, outright energy price caps, or generalised subsidies, should be avoided, as they are costly, difficult to unwind, and weaken price signals,” the organisation, which has around 190 member countries, warned.
The IMF has previously praised Ms Reeves’ tenure as Chancellor for striking a good balance between reducing the UK’s deficit and “growth-friendly spending” and investment into industries such as health and education.
While Mr Burnham has not yet confirmed any Cabinet appointments, Ed Miliband has been widely tipped as a possible successor for the post.
Responding to the report, Ms Reeves said: “We have the right economic plan to build a stronger, more secure Britain, with the IMF backing the choices I’ve made to put the country in a much stronger position than it was two years ago.”
