The British Prime Minister worries the investors that every leader in the world is afraid of

● Trump threatens: a 100% tariff on medicines imported into the USA
● Report: The US and Saudi Arabia have reached an agreement to develop civilian nuclear weapons

Britain has been burned in a similar scenario before. Liz Truss was appointed as Prime Minister in September 2022, on behalf of the Conservatives, presented a budget that deepened the deficit in order to stimulate growth, and provoked the wrath of the financial sector that every leader has always feared – the bond market. British bonds are particularly exposed to volatility and speculation due to the composition of their holders: not only local pension funds and other British institutional bodies, but foreign investors, who make up more than a third of their holders. Then, the surge in returns resulted in the ousting of Truss in 45 days, a record for a short term in the long history of British democracy.

“Who will pay for his generosity?”

Now, after Burnham’s first public statement, in which he announced that he would put an end to the phenomenon of homelessness, the ten-year British bond yields rose and crossed the 5% mark. The yield is the highest in the last six months, but is mainly due to the war in Iran and the expectations of an effect on inflation and therefore high interest rates from the Bank of England. On the one hand, the appointment of John Healy, an experienced politician from the more right wing of Labor to the position The Minister of Finance was received as a sign of stability; on the other hand, there is concern that he will lead to increased defense spending due to Healy’s positions – another line in the British spending column. The 30-year bond yields also jumped above the 5.7% threshold, which represents a higher risk that investors are pricing in the British national debt.

Burnham himself tried to calm the markets. Before he was elected to the position, he denied statements attributed to him, according to which “we need to stop being afraid of the bond markets”. Also at the first government meeting on Tuesday, he promised that every budget expenditure would be offset with another expenditure. Much to the embarrassment, the new government said that the abolition of VAT on electricity and energy would be financed by hoarding the digital identity card project of the previous government, but later discovered that the project was not financed in the budget at all. “Who’s going to foot the bill for Andy’s generosity?” was the headline of the “Daily Mail” on Wednesday morning.

“The bond market is on edge”

Evidence of concern was received after Burnham, just 48 hours after it was introduced, scrapped the idea of ​​increasing the income tax exemption ceiling, another step that would have increased the deficit. Burnham said eight months ago that the government intended to raise the bar to make it easier for the lower classes and pensioners, but on Wednesday the government announced that it was going back. Aware of the need to convey budgetary responsibility, Burnham allowed cameras into his first cabinet meeting, and made sure to tell the cabinet members: “We must demonstrate budgetary restraint, we must show our commitment to fiscal restrictions.”

The conservative opposition tried to attack him on this matter, less than 48 hours after eight, “Where will the money come from?” Conservative leader Cammy Bednock said. “The British bond market is on edge, and is very sensitive to any development,” the Financial Times wrote this week, “Burnham needs to gain fiscal credibility.” The complicated task of the new prime minister is to balance this credibility with his clear promises to turn his cabinet into a “government fighting the cost of living,” and to succeed where a series of British prime ministers have failed in the past.