Andy Burnham dreamed of becoming PM for decades. He got there at the worst possible time.
Andy Burnham got his timing all wrong and there’s nothing he can do about it (Image: Getty)
There’s only been one moment in my life when it was a good time for a Labour politician to become PM, and that was almost 30 years ago in 1997. Thanks in part to Margaret Thatcher, our national debt was just 37% of GDP. That allowed Tony Blair and then Gordon Brown to do what Labour always does, and let rip. By the time Brown was hoofed out in 2010, our debt-to-GDP ratio had more than doubled to 75%. After 14 years of Tory misrule, followed by the Keir Starmer and Rachel Reeves fiscal horror show, it’s now close to 100%.
There’s nothing Burnham would like more than to chuck money around like Blair and Brown, but he can’t. There’s none left. Instead, we owe £3trillion and rising. Chancellor John Healey still wants to tax, borrow and spend in his Budget on October 28, but may not get the chance. A terrifying global storm is brewing, and the UK is right in the epicentre. Everything Burnham wants to do will only make it worse.
Britain isn’t the only country drowing in debt. The US is an even bigger shambles. It’s debt has doubled in a decade to a mind-boggling $40trillion, some 125% of GDP. Blame Donald Trump, blame Joe Biden, blame whoever you like, it makes no difference. There’s no bargaining with that debt pile. Just like the Titanic couldn’t bargain with that iceberg. And it’s getting bigger and closer by the day.
The world is drowning in debt. Japan’s burden is higher still at 204% of GDP, while Italy (139%) and France (118%) are also sunk. Officially, the figure for China is 69%. Include all the hidden stuff, and the IMF puts it at more than 300%.
Despite that, governments everywhere continue to flood the market with new bonds to fund massive public deficits. That was doable when interest rates were low. They aren’t low anymore. In the US, 30-year bond yields just hit 5.3%, the highest since the financial crisis in 2007. In the UK, we pay 5.75%. That’s the most in the developed world, as investors demand higher rates because we’re so risky. It means we’re now spending even more on debt interest.
Today, £1 in every £12 the British state spends goes on debt interest. In the US, it’s $1 in every $7.40. This is totally unsustainable, yet all politicians do is borrow more. That’s what happens when debts become unimaginably high. Denial kicks in.
The crisis is being aggravated by the Iran war, which is driving up energy prices and inflation, which pushes up bond yields too. At the same time, tech giants such as Google and Micrsoft are pouring trillions into artificial intelligence infrastructure such as data centres. They’re borrowing like crazy too.
Yesterday, the US resorted to buying its own bonds to calm markets. That’s desperate stuff. What Trump really needs to do is get on top of that debt. He won’t.
None of this is Burnham’s fault. But instead of facing the storm, he’s acting as if it’s 1997, and he can tax, borrow and spend like Blair and Brown did. Our new PM is a man out of time. And his time is about to run out.