{"id":2676,"date":"2026-06-22T13:39:52","date_gmt":"2026-06-22T13:39:52","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=2676"},"modified":"2026-06-22T13:39:52","modified_gmt":"2026-06-22T13:39:52","slug":"next-uk-pms-first-job-manifest-economic-reality","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=2676","title":{"rendered":"Next UK PM\u2019s first job: manifest economic reality"},"content":{"rendered":"
LONDON, June 22 (Reuters Breakingviews) – The list of strategic mistakes that led to British Prime Minister Keir Starmer\u2019s resignation on Monday will fill many a book. Yet most stemmed from the \u200bbelief that an economy felled in 2023 by the war in Ukraine was set for a big rebound, \u200cenabling both rapid growth and easy fiscal consolidation. It didn\u2019t. Now, as the war in Iran ebbs, his successor may face a similar test \u2014 and will need to ensure the government appears firmly in control.<\/div>
The path is clear for Andy Burnham to succeed Starmer. The former Manchester mayor favours tighter state control of \u200butilities and higher taxes on property, wealth and investment income. But he has pledged to honour Starmer’s fiscal guardrails like \u200bbalancing day-to-day spending and putting debt-to-GDP on a falling path. Since those rules are judged against official \u2060forecasts rather than actual revenues and spending, the Office for Budget Responsibility (OBR), the UK’s independent fiscal watchdog, will retain its role as \u200bthe ultimate arbiter of fiscal credibility.<\/div>
The OBR’s projections have recently held outsized sway, with a downgrade to productivity causing havoc to last year\u2019s \u200bautumn budget. What has attracted less attention is whether Starmer’s promises were built on forecasts that turned out to be too rosy. Chief among them was ruling out increases in income and value-added taxes. This left officials constantly scrambling to make ends meet. One solution was raising employer National Insurance, angering \u200bbusinesses and contributing to higher inflation and interest rates in 2025.<\/div>
In 2024, however, expecting a strong recovery made sense. The departure of \u200bBrexit-friendly Conservative governments held the promise of renewed foreign investment. Inflation had fallen back to target, consumption was poised to boom and OBR forecasts suggested \u200cGDP growth \u2060would rise from 0.3% in 2023 to 2% in 2025, bringing workers out of welfare.<\/div>
Instead, households remained cautious, disability spending rose and a combination of food inflation and a new energy shock in the Middle East dimmed prospects and kept interest rates elevated. By March, the OBR expected growth of only 1.1% this year.<\/div>
Admittedly, no government can escape bad luck and Starmer’s government did much that appeals to \u200bits base, such as taxing businesses \u200bto maintain benefits, expanding workers’ \u2060rights, building renewable-energy capacity and curbing migration. But it was an error to choose economic variables wholly outside of its control as a yardstick for success.<\/div>
A similar trap may now await Burnham: if \u200bthe U.S. peace deal with Iran holds, the data could suddenly look more flattering in 2027, \u200band a business\u2011friendly pick \u2060for Treasury chief, such as former Health Secretary Wes Streeting, would calm bond markets. But tweaking taxes and handouts won’t win Burnham an election in 2029. For that, he needs the type of obvious win that made him popular in Manchester. A bold overhaul of social housing could \u2060be one. \u200bRegardless, he needs to chart his own course: relying on macroeconomic tides has \u200ba way of steering ships straight into the rocks.<\/div>
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Breakingviews<\/strong>Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.Sign up for a free trial of our full service at https:\/\/www.breakingviews.com\/trial and follow us on X @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.<\/div>