Prime Minister Facing 'Downslope' Ahead of Winter, Ex-Adviser Warns

Less than three months into his premiership, the Prime Minister is already on a 'downslope,' according to a former adviser. Andy Haldane, who previously served as an adviser to the Prime Minister, stated that the PM's 'high-water mark' has likely passed and predicted economic and political challenges as the nation heads into winter.

Haldane, also the president of the British Chambers of Commerce and formerly the Bank of England's chief economist, expressed skepticism about the Prime Minister's proposed national care service for older adults. While acknowledging the plan's honorable intentions, he described it as 'probably unfundable' given the country's 'precarious' fiscal position.

The Prime Minister outlined his vision for an NHS-style national care service, which would provide free personal care for the elderly, during his Labour Party conference speech last month. He suggested that the initiative would be funded through adjustments to the state pension's triple lock, rather than through increased taxation.

However, economists, including those at the Institute for Fiscal Studies, have cast doubt on whether the projected savings would be sufficient to cover the costs of such a service.

In an interview on LBC's Nick Ferrari at Breakfast show, Haldane suggested that the Prime Minister's recent conference speech represented a peak. "I suspect the high-water mark, both economically and politically, was probably Andy's speech a couple of weeks ago," Haldane said. "You know, we're now seeing prices on the forecourt going up, we'll see food prices going up as we approach Christmas, we'll see energy prices going up at the turn of the year. That cost-of-living squeeze will be real. It'll probably be compounded by a cost of borrowing rise. So, I think from here we're into the downslope economically and possibly politically as well."

On the affordability of the social care plans, Haldane elaborated, "I think Andy's intentions are honorable, but probably unfundable. Everyone wants to tackle the social care crisis. Everyone wants to tackle our defense problems. Everyone wants to tackle the NEETs crisis among young people. But they all come with a fat cheque applied. And at the moment, this is an unforgiving environment for any borrower. I worry that we are in a precarious position fiscally."

The global bond markets have reflected the strained public finances, with the UK government facing higher borrowing costs compared to other G7 nations. Yields on ten-year UK gilts have surged to 19-year highs above 5.5 percent in recent weeks, while 30-year yields have surpassed 6 percent for the first time since 1998.

Haldane had previously served as an informal adviser to the Prime Minister, alongside former Goldman Sachs chief economist Jim O’Neill, as the latter set his sights on Downing Street. Neither has taken a formal government position. Haldane has previously been critical of the Prime Minister's direction, remarking last month that the administration was increasingly perceived as a "traditional tax and spend socialist government with better TikTok videos."

He has also identified the Prime Minister's "unwillingness and/or inability" to reduce public spending as a significant weakness. "Unless and until action is taken on that, Andy will remain, alas, in hock, to use an expression, to the bond market," Haldane stated recently, echoing a sentiment previously expressed by the Prime Minister himself regarding the bond markets.