Think Tank Says UK PM Burnham Must Cut Spending or Raise Taxes

British Prime Minister Andy Burnham will need to either raise taxes or reduce government spending to fulfill his policy commitments on defense and the cost of living, according to a leading economic think tank.

British Prime Minister Andy Burnham has outlined his government's economic agenda amid growing fiscal concerns. [Photo: Andy Burnham Facebook]

Burnham announced a series of measures after taking office last week, including cuts to electricity bills and a £2 cap on bus fares across most of England, Emer Moreau reported for BBC News.

However, the National Institute of Economic and Social Research (NIESR) warned that persistent inflation—driven in part by higher energy prices linked to the conflict involving Iran—will continue to strain the UK's public finances.

The institute questioned whether Burnham had "fully thought through" how his campaign promises would be funded, arguing that the government would ultimately have to increase taxes or reduce spending elsewhere.

Stephen Millard, NIESR's deputy director for macroeconomics, said: "There's clearly no scope for increasing borrowing, so it is about choices."

Labour's election manifesto pledged not to raise taxes on working people, including income tax, VAT, and National Insurance contributions—a commitment Burnham has said he intends to honor.

Millard said NIESR favors funding cost-of-living measures through tax reform or reductions in other areas of government spending rather than through additional borrowing.