Haldane shifts from Burnham adviser

Andy Haldane, former Bank of England chief economist, was informally advising Andy Burnham over summer. Haldane is viewed as an independent thinker committed to regional growth.

Haldane backs Conservative economics

In a Financial Times article, Haldane says Conservative economic policies are far more likely to succeed than Labour's. He contrasts Burnham's 1950s-style state socialism with Badenoch's 1980s smaller state approach.

“In today's straitened circumstances, the rightward fork is far more likely to succeed.”

Austerity was wrong, but context differs

Haldane acknowledges George Osborne's austerity policies were a mistake when UK debt was smaller and borrowing costs were negative in inflation-adjusted terms. A two trillion pound investment gap opened up.

“There will probably never have been a better time for public investment.”

Today's fiscal environment demands restraint

Long-term borrowing costs have risen four to five percentage points and now exceed the UK economy's long-term nominal growth rate. This signals the need for primary fiscal surpluses to stabilise debt dynamics.

Labour's expansion risks crowding out growth

Haldane argues Labour's expansive state plan sits uncomfortably with current fiscal constraints and public sector productivity failures. Larger government risks crowding out growth and triggering bond market confidence loss.

“It also runs the risk of a loss of confidence in bond markets that causes borrowing costs to ratchet, think "Liz Truss-plus"”