Burnham's Economic Agenda Faces Skepticism from Economists

Andy Burnham's first few weeks as Prime Minister have been met with scrutiny from economists, who are assessing the impact of his policies on inflation, interest rates, and living costs. Thomas Pugh, chief economist at RSM UK, notes that the economy is still recovering from a lack of growth over the past two decades, with real wages only 4.1% higher than in 2008.

Burnham's promise to 'give people some breathing space now' has been met with skepticism by economists, who point out that his recent announcements on VAT cuts for electricity bills and bus fare caps are unlikely to have a significant impact on inflation or living costs. Pugh estimates that these measures will cost around £1.5 billion, but notes that this is only 0.1% of annual government spending.

The experts agree that Burnham's broader agenda, which includes public control of essential services, mass housebuilding, and re-industrialization, could improve the UK's long-term growth potential if executed well. However, they also caution that these policies will take time to feed through and may not provide immediate relief for households.

The Bank of England (BoE) is likely to be monitoring Burnham's policies closely, particularly in regards to their impact on inflation. The BoE recently kept interest rates at the same level, with three members favoring an increase. Economists warn that any 'spend now, pay later' policies could lead to higher borrowing costs and dampen economic growth.

Burnham has pledged to stick to the fiscal rules, limiting his ability to borrow freely. This will likely force him to make difficult choices between funding his various priorities, including council house building, social care reform, and higher defense spending. The experts agree that this will be a challenging task for Burnham.