Burnham Inherits a Slowing Economy and a Strained Washington Relationship
The incoming Prime Minister takes office facing an economy squeezed by the fallout from the Iran conflict, strained public finances and mounting pressure on public services, with growth widely expected to slow sharply this year as inflation rises. He is bound by Labour’s commitment not to raise its main tax rates, though he has refused to rule out a wealth tax.
The most unpredictable inheritance is diplomatic. Sir Keir Starmer built an initially productive relationship with President Trump before ties deteriorated over Britain’s position on Iran and its defence spending, and Mr Burnham assumes that relationship at its most strained point. Domestically he has promised to “expend quite a lot of political capital” on social care, an area he has owned since drafting the 2010 National Care Service white paper and where councils face a reported £7bn shortfall. The arithmetic of a wealth tax, a care settlement and an unchanged income-tax pledge is the defining tension of his first year. Watch the autumn fiscal event.