LONDON (AP) — Within his first day in office, UK Prime Minister Andy Burnham has already signaled just how difficult his economic balancing act will be, as he attempts to breathe new life into a country whose economy has been stuck in low gear for years.
Burnham, a member of Britain’s left-leaning Labour Party, is under pressure from two very different directions. Ordinary citizens are desperate for relief from the high cost of living, while the investors who purchase government bonds are demanding that he get the country’s swelling public debt under control — debt that has now reached proportions not seen since the 1960s.
In a move that caught many political observers off guard, Burnham chose former Defense Secretary John Healey to serve as his Treasury chief. Healey previously worked at the Treasury under former Prime Minister Gordon Brown, and his appointment is widely interpreted as a signal that the government intends to follow through on its commitment to bring down Britain’s debt load.
Then, early Tuesday, Burnham took a concrete step to ease the financial burden on struggling households. His government announced it would eliminate the tax on residential electricity for at least six months starting in October, a move expected to save the average home about 45 pounds — roughly $60 — per year.
To reassure investors that the move wouldn’t add to the country’s financial woes, the government said it would cover the cost by scrapping a planned digital ID program, making clear this was not the beginning of an unbudgeted spending surge.
Victoria Scholar, head of investment at interactive investor, offered a sobering assessment of what lies ahead for the new Treasury chief.
