19 June 2026
If you are covering the latest public sector finances and Andy Burnham’s victory in the Makerfield byelection, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Today’s borrowing figures put the challenges facing Andy Burnham into sharp contrast should he now go on to contend for the leadership of the Labour Party and thus the country. Burnham has achieved his first goal of returning to parliament, with a resounding victory in the Makerfield byelection likely to now propel him to number ten. However, markets await to see just how quickly he looks to strike and ultimately seize the premiership from Keir Starmer, and what his economic plan looks like exactly.
“It comes at a time, however, where the public finances remain incredibly stretched and strained. Borrowing for May was £23.3 billion, 30% higher than the same time last year and comfortably above the £17.7bn forecast by the OBR. While yields have come down in recent weeks as the US and Iran resolve their conflict, borrowing is higher than it was last year and bond markets are still uncomfortable with the level of borrowing and lack of spending cuts being proposed by this government.
“Ultimately none of that is going to change with a Burnham government, and in fact could easily see further entrenchment. Burnham will likely be elected by the Labour Party to bring the government more to the left, increasing taxes, spending and ultimately borrowing – indeed the concept of additional borrowing specifically to fund much needed defence spending has been mooted of late. As such, the yield on this debt is likely to remain at a premium compared to developed market peers, resulting in increasing costs for debt interest – indeed interest stood at £11.7bn in May, more than 50% higher than the same time last year. He has looked to calm market fears with sensible appointments of economic advisers, including the former head of the OBR, but even still he is going to be challenged fiscally should he become prime minister.
“The political picture is likely to get messy in the short-term, but concerns around the public finances will endure long after it is resolved.”
