Andy Haldane, who previously served as chief economist at the Bank of England, has told Prime Minister Andy Burnham that the forthcoming Autumn Budget risks being one that defers rather than confronts pressing public spending decisions. Haldane — who maintained an informal advisory role with Burnham during the latter's tenure as Mayor of Manchester — told a television programme that the Government had yet to fully reckon with what he viewed as a fragile fiscal position, arguing that Britain was drawing close to the upper bounds of both its tax revenues and its borrowing headroom, and urged ministers to pursue lower taxes alongside reductions in public spending as a route to faster economic growth.
His position held that levying higher taxes on banks pointed to a reluctance to cut government spending — a trade-off he characterised as saving money in the near term at a steeper price down the line — and that thriving businesses would find themselves under mounting tax burdens as a consequence. Haldane pointed to economic policy as a domain where Burnham's confidence appears less developed, a view that sits alongside broadly positive readings of other aspects of his leadership.
Haldane indicated that the implications had not yet been fully absorbed, including at the level of Downing Street. Yield rates on government debt place the country near the top of the G7 for borrowing expense, even though its debt load and fiscal deficit do not put it in a comparable position within that same grouping.
A closer look at Westminster's political landscape points to opposition forces that may lie well beyond the chamber floor itself. Starmer's standing among his own ranks appeared to have eroded noticeably. One exposure that could undermine Andy's position is the prospect of losing control over the trading floor.
The Autumn Budget falls on 28 October, a date that arrives against a backdrop of how readily political standing can shift beneath any chancellor's feet. Haldane has described Labour's proposal for a £2 billion levy on banks as misguided, remarks that provide the backdrop to the advisories now being issued. Those costs, the reasoning held, would not remain confined to lenders — even those financially positioned to absorb them — but would instead pass along to households and businesses throughout the wider economy.
Financial institutions are lobbying against a planned increase to bank levies that Chancellor John Healey is expected to announce in next week's Budget. The Confederation of British Industry has described the proposal as self-defeating, while lenders point to their existing tax burden as already exceeding what institutions face in rival financial hubs including New York and Frankfurt.
With the Chancellor seeking revenue to shore up public finances and ease cost-of-living pressures, trade unions aligned with Labour are calling for banks to face higher tax contributions, pointing to the elevated profits those institutions have recorded as interest rates have risen. Barclays posted third-quarter pre-tax earnings of £2.3 billion, a figure that sits 12 per cent above the equivalent period a year earlier. Healey is broadly anticipated to lift the supplementary levy on banks' corporation tax bills, a charge currently set at three per cent.
Haldane put it to a prominent broadcaster that, were the policy's net result simply to trim a few billion pounds from bank profits, many would argue the industry could absorb that without difficulty. Before setting that aside, two objections on the matter deserve attention. Where such levies apply, the cost tends not to stay with the institution — research points to banks adjusting fee structures or trimming deposit returns as a way of redistributing that burden down to account holders.
Any costs arising from bank-related policy changes would ultimately fall on account holders rather than the institutions themselves. Haldane stated that proponents of the levy were wrong to believe it would apply to banks rather than to others.
