JUST days before Andy Burnham is installed as PM on Monday, amid much speculation and lobbying about the future policies and the personnel of the Labour government, the International Monetary Fund (IMF) yesterday warned Burnham to avoid a fresh spending binge and to cut government spending and reduce borrowing to avoid an economic collapse.
The US-based fund, said that authorities ‘should be very selective in accommodating new demands and re-prioritise, and that future spending reviews should focus on reallocating resources across departments, rather than increasing total spending’. It advised Burnham to cut budgets for some departments if others need more cash rather than raising taxes or borrowing more.
On Thursday, the Paris-based Organisation for Economic Co-operation and Development (OECD) also warned that Britain’s record tax burden meant the new prime minister would have to focus on spending cuts to balance the books.
Hammering home the warnings of the IMF, Tory MP Mel Stride, the shadow chancellor, said: ‘The IMF are right. Burnham must focus on getting our debt down. That must not mean further tax rises. Tax hikes have already done great damage to our economy. Controlling spending, especially the welfare bill, is the responsible way forward.’
The agency urged Burnham to ditch the state pension triple lock to limit growth in welfare spending, and to charge patients for NHS services.
‘Deeper expenditure reforms should be considered, for example replacing the “triple lock” with a policy of indexing the state pension to the cost of living,’ the IMF said.
It also recommended ‘improving the targeting of social benefits’ while ‘expanding charges in the health system beyond existing user fees while protecting the vulnerable, and focusing more on preventative care’, including charging for GP appointments.
‘Britain cannot afford a fresh spending binge’, the International Monetary Fund (IMF) has warned Andy Burnham.
The Washington-based body said the UK Government should focus on reducing the deficit, cautioning that the UK faces serious ‘challenges’ from high debts, rising interest bills and the increasing costs of healthcare and pensions linked to an ageing population.
However, Burnham’s speech yesterday pledged to be ‘unashamedly’ Labour, suggesting he will tax and spend more. ‘VAT and taxes on property are already unusually high,’ the IMF noted, while raiding capital gains risked driving the rich abroad.
Even raising income tax further risks undermining receipts by dissuading the population from working.
‘Britain is in the midst of a long freeze in income tax threshold, a stealth raid that is on course to more than double the yield from the tax to £431bn in 2030-31,’ the IMF said.
Just how close the financial markets are to a crash over AI indebtedness and stock market speculation and the bad loans of the shadow banking sector, appeared yesterday after a 63 per cent surge in failures of financial services companies due to the collapse of the the unregulated British shadow bank, Market Financial Solutions (MFS). This collapsed in February amid allegations of fraud, according to the financial consultancy Kroll.
Overall, 49 finance firms collapsed in the first half of the year, up from 30 during the same period a year earlier.
However, almost half of those that failed in the first half of 2026 were related to the fall of MFS.
However, Burnham is widely expected to increase taxes as PM and has admitted that he would make ‘difficult’ decisions to balance the nation’s finances, which may include ‘having to ask for a little more’ from taxpayers. He refused to rule out wealth taxes.
Yesterday, markets in Japan and Taiwan plunged as investors raised questions about the soaring valuations of companies tied to the technology.
Kei Okamura, portfolio manager at financial adviser Neuberger Berman, said: ‘The word “bloodbath” is accurate because it is across the board.’
There is only one way forward. The TUC must be forced to call a general strike to bring in a Workers’ Government and socialism, under which industry and banks will be nationalised without compensation as part of a socialist planned economy for the benefit of all!