UK Prime Minister Says Government Will Be 'Grounded in Fiscal Responsibility' — Update

By Paul Hannon

The U.K. government is taking action to cut its debts and will continue to stick to its self-imposed budget rules, Prime Minister Andy Burnham told lawmakers Wednesday.

Yields on U.K. government bonds have risen sharply over recent days, amid a worldwide selloff that in part reflects worries about inflation as the conflict in the Middle East continues to block the Strait of Hormuz to energy shipments.

"We are taking the action needed to get debt down," Burnham said. "This will be a government that is grounded in fiscal responsibility."

Burnham took office in July, inheriting a sluggish economy and government debts that are close to 94% of annual economic output.

Investors worry that Burnham will increase spending without raising taxes to bring in a matching amount of revenue, with a new budget to be outlined on Oct. 28.

However, Burnham again said that the government will stick to its fiscal rules, under which the gap between the government's spending and its revenues is set to shrink over coming years.

"We're cutting the deficit faster than any other G7 country," Burnham told lawmakers, referring to a group of large advanced economies.

In the fiscal year that ended in early April, the government led by Burnham's predecessor as head of the Labour Party reduced the gap between spending and revenue to its narrowest since the outbreak of the Covid-19 pandemic.

But that gap remains wide, and economists estimate it will be around 4% of gross domestic product in the current fiscal year. Higher borrowing costs as a result of the bond selloff would make it more difficult for the government to narrow its budget deficit.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

September 02, 2026 08:02 ET (12:02 GMT)