Burnham Warns of Challenging Budget Amid Rising Inflation
Prime Minister Andy Burnham has warned that the upcoming October Budget will be 'challenging' due to rising inflation, driven by higher oil and gas prices from the Iran war. Official data showed UK headline inflation rose to 3.1% in August, up from 2.9% in July, with fuel costs increasing by 23%. Burnham emphasized economic resilience but acknowledged concerns over public finances being strained as fiscal headroom erodes. Oxford Economics estimates the Chancellor may need an additional £11 billion to maintain financial flexibility. The Bank of England is expected to hold interest rates at 3.75% in its next meeting, though economists predict up to four rate hikes by year-end due to rising inflation expectations. Inflation could reach 4.5% in January as energy prices continue climbing. Burnham stressed the need for 'highest degree of prudence' during a visit to McLaren's factory and confirmed an earlier-than-usual Budget decision aimed at reducing uncertainty.
Topics: budget inflation interest rates oil prices