Burnham faces Badenoch at first PMQs as UK borrowing costs hit 18-year high

Andy Burnham faced Conservative leader Kemi Badenoch at Prime Minister's Questions for the first time on Wednesday, pledging his government would be "grounded in fiscal responsibility" as UK borrowing costs surged to multi-decade highs. The yield on a 10-year government bond reached its highest point since 2008, while the 30-year bond yield climbed to a level last seen in 1998 — a development that could limit the administration's spending room ahead of the October 28 Budget.

The fiscal pressure

Burnham took over the Labour leadership from Sir Keir Starmer in July, meaning Wednesday's PMQs was his first encounter with Badenoch at the despatch box. Badenoch pressed the prime minister to explain where spending would be cut and how he would manage rising debt, accusing him of being a "spendthrift prime minister who wants to say yes to everyone but cannot tell us where the money is coming from."

The PM, who used the summer recess to tour the country announcing cost-of-living measures, said he had already acted to cut taxes — pointing to the removal of VAT on energy bills and a reduction in business rates for the hospitality sector. He declined to pre-announce Budget decisions: "I'm not going to do what any prime minister has done and write the budget here," he said.

Pension and welfare pressure

Economist and cross-bench peer Lord Jim O'Neill, who had been widely tipped to become Burnham's chief economic adviser but ultimately declined the role, told the BBC the current spike in market interest rates would force Labour to begin "dealing with the triple lock" on the state pension and "excessive" welfare spending. Burnham and Chancellor John Healey have agreed on an earlier Budget date to reduce market speculation. Badenoch argued that O'Neill's praise of Burnham's first five weeks contrasted with warnings that his parliamentary debut would unsettle investors.