There’s been a lot of noise since Andy Burnham took over as Prime Minister, and if you’re already managing debt or watching your finances closely, it’s worth cutting through the headlines and looking at what’s actually changed, and what hasn’t. Here’s the practical picture.
What Burnham Has Announced So Far
The most concrete move so far is the removal of VAT from domestic electricity bills from 1st October 2026, a direct attempt to ease cost of living pressure. Alongside that, Burnham has set out plans to reform business rates, aiming to reduce the burden on pubs and high street businesses by shifting more of it onto warehouses and out-of-town developments. He’s also been open about the fact that balancing the books may mean the government “asking for a little more” at some point, which most people are reading as an early signal on tax.
The detail on most of this, including a promised ten-year plan for the economy, is still to come. What we have right now is direction of travel rather than a finished policy.
The Markets Didn’t Wait for the Detail
What’s more immediately relevant if you’re managing debt is how markets reacted before any of that detail arrived. On Burnham’s first day in office, he referred to using “flexibility within the fiscal rules,” and gilt yields jumped in response, with the 10-year yield hitting 5.04% and the 30-year reaching 5.75%, among the highest in the G7. Traders read that comment as a signal that government borrowing could increase before a clear funding plan was in place, and priced that risk in immediately.
This matters beyond the bond market. Lenders price fixed-rate mortgages off swap rates, which tend to move in line with gilt yields. When yields rise, the cost of new fixed mortgage deals tends to follow, even before any actual policy has been confirmed. So it’s worth bearing in mind that market reaction to a single phrase in a speech can feed through to real borrowing costs faster than any formal announcement does.
Where Interest Rates Actually Stand
Separately from all of this, the Bank of England has held its base rate at 3.75% for four consecutive meetings, with the next decision not due until 17 September. Inflation was running at 2.6% in June and is expected to rise further this year, largely because renewed conflict in the Middle East has pushed up energy costs. That combination makes a near-term rate cut look unlikely. If anything, the pressure at the moment is upward rather than downward.
What This Means If You’re Already Under Pressure
None of this is cause for alarm, but it is worth being realistic about. The VAT cut on electricity from October will help, but it’s a modest saving against a backdrop where borrowing costs have already moved in the other direction, and inflation isn’t falling the way many had hoped earlier this year. If you’ve been holding off on dealing with debt in the expectation that things will get easier once the new government settles in, the evidence so far doesn’t support waiting for the 28th October Budget to find out.
The market reaction to Burnham’s first day shows how quickly conditions can shift on the back of a single comment, weeks before any Budget confirms what’s actually going to happen. That’s exactly the kind of environment where getting a clear, current picture of your own situation matters more than trying to predict what government policy will eventually look like.
If you’re dealing with debt and wondering whether to wait for the Budget or the Bank of England’s next move, the honest answer is that clarity isn’t likely to arrive quickly, and your options are usually better the sooner you look at them properly. If you are concerned, please get in touch.
Adcroft Hilton: Debt, Insolvency & Bankruptcy Specialists
Helping you make the right choice for your financial future.
