Ex-BOE Economist Haldane Urges Burnham to Cut Public Spending to Calm Bond Markets

Andy Haldane, former chief economist at the Bank of England, urged Prime Minister Andy Burnham to "take the knife to public spending" in this month's Budget to reassure bond investors and lower the UK's rising borrowing costs, warning the public finances are "skating on pretty thin ice." Haldane, now president of the British Chambers of Commerce, told CNBC that spending discipline could cut government borrowing costs by as much as half a percentage point and "could therefore actually be good for growth." Higher borrowing costs have already pushed up mortgage rates, even with the Bank's base rate held at 3.75pc. He said welfare and wider public sector spending remain "totemic" issues for bond markets, and urged Burnham to reduce the overall spending envelope rather than move funding around. Haldane also warned that further taxes on banking and energy would be "disastrous" and that the Government is "significantly underweight in its economic and financial expertise."