Burnham grilled on economy at first PMQs as borrowing costs surge

Andy Burnham faced his first Prime Minister’s Questions on Wednesday under intense pressure over the state of Britain’s public finances, as UK government borrowing costs climbed to their highest level in more than 16 years. The yield on 30-year gilts hit 5.45 percent, a figure not seen since 1998, rattling markets and handing opposition MPs fresh ammunition to challenge the new Labour administration.

Opposition seizes on rising gilt yields

Conservative leader Kemi Badenoch led the charge in the Commons chamber, pressing Burnham on whether Labour’s tax and spending plans had spooked investors and driven up the cost of government debt. She cited the gilt surge repeatedly, arguing that working families would ultimately pay the price through higher mortgage rates and squeezed public services. Burnham defended the government’s record, insisting that global factors — including uncertainty around US trade policy and persistent inflation — were driving bond markets across Europe, not decisions made in Westminster.

But the numbers made it a difficult argument to sustain. UK borrowing costs have now risen faster than those in France, Germany and Italy over the same period, a comparison opposition MPs were quick to deploy. The pound also slipped 0.4 percent against the dollar during the session, adding another layer of complexity to the government’s economic narrative.

“We are taking the difficult decisions necessary to stabilise the public finances,” a Treasury spokesperson said after the session. “The alternative — doing nothing — would be far worse for growth and for ordinary people.”

Still, the pressure won’t ease anytime soon.

Markets and mortgage holders both watching closely

Analysts warn that sustained gilt yields above 5 percent could force the Office for Budget Responsibility to revise its forecasts when it next publishes projections in March. That would narrow the government’s already thin fiscal headroom — estimated at just £9.9 billion in the autumn statement — and potentially trigger another round of spending decisions before the summer recess.

For millions of homeowners on tracker mortgages or approaching the end of fixed-rate deals, the trajectory of gilt yields is anything but abstract. Around 1.6 million households are expected to refinance in 2025, many of them facing rates significantly higher than when they last signed on.

Burnham’s team is betting that the economy will stabilise before those pressures fully bite. Whether the markets give them that time is another question entirely.