PMQs clash over economic turmoil

Andy Burnham used his first Prime Minister's Questions to blame the Conservatives' legacy for the UK's rising borrowing costs and market turbulence, as government borrowing costs reached their highest levels in 28 years.

The Prime Minister faced Kemi Badenoch, leader of the Conservative Party, for the first time in the weekly session, with the opposition leader pressing him on tax rises and the government's handling of the economy.

Badenoch pointed to comments by Lord Jim O'Neill, a former Treasury minister and an ally of Burnham, who warned that the Prime Minister's statement to the Commons on Tuesday was "the last thing investors want to hear."

"Lord O'Neill is a serious economist. He knows what he's talking about," Badenoch said, adding: "How does he plan to tackle the Government's rising debt costs?"

Responding, Burnham acknowledged that he and Lord O'Neill do "not always agree" before turning to the record of the previous Conservative government.

"When they were in government, we saw 14 years of stagnant growth," he said. "We saw 14 years of debt rising as a percentage of GDP. I would say to her that the turbulence on global markets are because of that exposure that they left behind."

The Prime Minister insisted the government was "turning that corner," citing figures from the first half of the year: the fastest growth in the G7, borrowing at its lowest level in six years, and a deficit being cut faster than any other G7 country.

Market pressures persist

The exchange came as UK government bond yields edged higher on Wednesday, with 10-year bonds up four basis points, the highest level since June 2008, according to Kent Online. The yield on gilts rose again, adding to the fiscal challenges facing Chancellor John Healey ahead of the autumn Budget.

Government long-term borrowing costs had reached their highest levels for 28 years amid a global bond sell-off partly linked to concerns over the Middle East conflict and inflation, as reported by Kent Online.

The Guardian reported that some economists have linked the rise in borrowing costs to Burnham's commitment to public control of utilities, though most market strategists attribute the move to a jump in oil prices.

Lord O'Neill told the BBC's Today programme that the Prime Minister's statement had been "the last thing that investors want to hear" and said traders were asking: "Who's going to get real in this country about the challenges of getting our debt down and controlling spending?" He suggested that the Budget would need to include spending cuts or tax increases to restore the government's fiscal headroom.

Tax questions and political point-scoring

Badenoch pressed Burnham on whether he planned to raise taxes again, challenging him to be honest about tax rises in October's Budget.

The Prime Minister said his first move in office had been to "cut tax," referencing the removal of VAT on energy bills, but declined to rule out further rises, stating he would not write the Budget in advance.

Badenoch criticised Burnham for not saying "no to a single spending request" during his three-hour statement to the Commons on Tuesday, quipping: "A prime minister needs to be a leader, not a people pleaser."

The Conservative leader also compared the market pressure facing Burnham to that seen during Liz Truss's mini-Budget, as reported by The Guardian.

Burnham, in turn, criticised Badenoch's recent shadow cabinet reshuffle, linking it to the Truss mini-Budget, according to The Guardian.

The Prime Minister said he would stick to fiscal rules and reduce cost of living pressures, as the government sets an early Budget date to reduce speculation, according to Kent Online. Burnham said he and Chancellor John Healey had chosen the date to "reduce speculation" in markets.