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  "path": "/money/imf-tax-borrowing-markets-andy-burnham",
  "publishedAt": "2026-05-18T12:04:38.000Z",
  "site": "https://www.gbnews.com",
  "tags": [
    "Tories to force vote on opening up the North Sea as Labour confirms new licences ban",
    "Iconic British high street chain reportedly prepares launch of click and collect for the first time",
    "Water bills set to rise for 14,000 families in controversial new trial",
    "The GB News Editorial Charter"
  ],
  "textContent": "\n\n\nLabour must reduce welfare spending and borrowing or risk a backlash from financial markets as Britain's borrowing costs continue to climb.\n\nThe International Monetary Fund (IMF) has warned in its annual assessment of the UK economy that ministers must \"stay the course on deficit reduction\" to prevent further pressure on public finances.\n\n###\n\n\n\n\nThe IMF said there was only \"limited\" scope for additional tax rises following Chancellor Rachel Reeves's £75billion of tax increases since taking office less than two years ago.\n\nWith the tax burden now sitting at its highest level since the Second World War, the Fund warned that \"difficult choices to contain spending\" would become unavoidable.\n\n###\n\n\n\n\nTRENDING\n\nStories\n\nVideos\n\nYour Say\n\n###\n\n\n\n\nThe IMF upgraded its UK growth forecast to one per cent for 2026, up from the 0.8 per cent prediction issued last month.\n\nThe revision followed official figures showing the economy expanded by 0.6 per cent during the first quarter of 2026, marking the strongest quarterly growth in a year.\n\nHowever, the IMF said the conflict in the Middle East was now \"dampening near-term prospects\" for the British economy.\n\nLuc Eyraud, the IMF's mission chief to the UK, said the improved growth outlook \"reflects stronger carryover and pre-shock momentum not a re-evaluation of the headwinds now coming from the Middle East war\".\n\nThe Fund also forecast inflation would rise to just under four per cent by the end of 2026 as energy prices continue increasing, leaving inflation almost double the Bank of England's target.\n\n###\n\n\n\n\n###\n\n\n\n\n###\n\n\n\n\nGovernment borrowing costs climbed sharply following publication of the report, with yields on 30-year gilts reaching 5.86 per cent for the first time since 1998 before easing slightly later in the session.\n\nThe 10-year gilt yield also rose close to 5.2 per cent, a level not seen since 2008.\n\nMarkets have been unsettled by rising oil prices linked to the conflict involving Iran alongside political uncertainty within Government.\n\nKemi Badenoch previously warned Britain could face a \"Burnham premium\" if Andy Burnham were to succeed Keir Starmer as Prime Minister.\n\n### LATEST DEVELOPMENTS\n\n\n\n\n  * Tories to force vote on opening up the North Sea as Labour confirms new licences ban\n  * Iconic British high street chain reportedly prepares launch of click and collect for the first time\n  * Water bills set to rise for 14,000 families in controversial new trial\n\n\n\n###\n\n\n\n\n###\n\n\n\n\nCritics have argued Mr Burnham's approach could lead to higher borrowing and increased national debt.\n\nThe IMF also appeared to caution Labour MPs calling for a more Left-wing economic agenda.\n\nThe report suggested future spending reforms could include changes to the state pension triple lock and \"expanding charges in the health system\".\n\nLooking ahead, the Fund warned Britain would face mounting financial pressures over the next 20 years from an ageing population, defence spending commitments and climate transition policies.\n\nThe IMF report stated: \"Beyond the planned tax ratio increase until 2030, staff analysis suggests that the long-term scope for further revenue increases is becoming limited unless more fundamental tax reforms are envisaged.\"\n\n###\n\n\n\n\n###\n\n\n\n\nThe Fund also advised any support for households facing higher energy bills should remain \"targeted, temporary, and financed through offsetting measures\".\n\nInterest rates are expected to remain at 3.75 per cent for the rest of 2026 under current energy market assumptions, although some economists believe further increases may be required to tackle inflation.\n\nMs Reeves welcomed the IMF's assessment and said: \"The IMF upgrading its growth forecasts and backing our fiscal strategy is yet more proof that this Government has the right economic plan.\"\n\nShe added: \"The choices I have made as Chancellor mean our economy is in a stronger position as we deal with the costs of the war in Iran.\"\n\n###\n\n\n\n\n###\n\n\n\n\n\"Putting our stability at risk when signs of progress are emerging would leave families and businesses worse off,\" Ms Reeves said.\n\nSusannah Streeter, chief investment strategist at Wealth Club, said: \"Gilt investors are the canaries in Labour's coalmine, demonstrating the increased wariness with which the UK is being viewed.\"\n\nMs Streeter warned political uncertainty was adding to global tensions at a time when Britain needed stability to attract investment.\n\nRecent selling pressure in the gilt market has pushed borrowing costs higher, increasing strain on public finances as some Labour figures continue calling for higher spending.\n\n###\n\n\n\n\n\n\n\n\n\n\n**Our Standards: The GB News Editorial Charter**",
  "title": "IMF issues warning to UK over tax and borrowing as markets fear Andy Burnham plans for Britain"
}