{"text":[[{"start":11.55,"text":"Andy Burnham has discussed with a leading economist how he might boost infrastructure spending without breaking Labour’s fiscal rules and spooking the markets, as the Greater Manchester mayor plots his move on Downing Street."}],[{"start":24.75,"text":"Lord Jim O’Neill, former Treasury minister and ex-Goldman Sachs chief economist, has urged Burnham to be ambitious within the government’s current fiscal rules, creating space to borrow more for projects that stimulate growth."}],[{"start":39.7,"text":"O’Neill has proposed that an independent body should assess new rail, road and energy projects to give the markets confidence that extra borrowing would only be used to back projects with “high positive economic multipliers”."}],[{"start":52.900000000000006,"text":"Bond markets are watching Burnham closely for any sign that he would weaken fiscal discipline if he succeeds in winning the Makerfield by-election on June 18 and then topples Sir Keir Starmer as prime minister."}],[{"start":64.85000000000001,"text":"Burnham reassured the markets last month that he would stick to the government’s current fiscal rules and also retreated from his previous suggestion that defence spending should be excluded from self-imposed borrowing limits."}],[{"start":78.4,"text":"A number of sources confirmed that Burnham had discussed options for increased infrastructure investment with O’Neill. But a Burnham spokesperson said: “He supports the fiscal rules. He has no plans to change them.” "}],[{"start":91.10000000000001,"text":"O’Neill, who is co-president of the Northern Powerhouse Partnership with former Tory chancellor George Osborne, told the FT: “I think it would be possible to be more ambitious under the current second fiscal rule, of borrowing to invest.”"}],[{"start":106.10000000000001,"text":"He has proposed to Burnham that the existing National Infrastructure and Service Transformation Authority, a government agency, should be made independent with powers to scrutinise the value for money of proposed projects."}],[{"start":119.65,"text":"“Turning Nista into an independent entity from the Treasury, so that it was very transparent and informed the public about projects that had high positive economic multipliers, would help maintain financial credibility and the Office for Budget Responsibility long-term forecasts,” O’Neill added."}],[{"start":137.45000000000002,"text":"Burnham has regularly advocated for increased spending on northern transport projects, such as a new underground station at Manchester Piccadilly, which he views as crucial to the future of the region’s rail network and a wider economic catalyst. "}],[{"start":151.60000000000002,"text":"The discussions are the latest sign that Burnham would seek greater flexibility to invest without a major overhaul of the fiscal rules, which would risk frightening already nervous debt markets. "}],[{"start":162.90000000000003,"text":"Ruth Curtice, a former top Treasury official who now heads the Resolution Foundation, said that in principle fiscal rules could have “any number of definitions”. "}],[{"start":172.80000000000004,"text":"“But a country’s debt is a measure of how much it owes to others and does not truthfully vary depending on what it is spent on,” she warned. "}],[{"start":180.70000000000005,"text":"There was a risk of a “slippery slope where more and more spending is excluded”, she added. “The bond market will be alive to that slippery slope, and will ask for a price for additional borrowing whatever it is spent on.”"}],[{"start":193.05000000000004,"text":"Chancellor Rachel Reeves increased the scope for investment after she came into office. She switched her key target to the current budget balance, which excludes borrowing for investment, saying she will bring this into surplus by 2029-30."}],[{"start":207.00000000000003,"text":"On top of this, Reeves changed the official debt target to public sector net financial liabilities — PSNFL — a wider measure that includes all financial assets and liabilities in the national accounts. "}],[{"start":220.75000000000003,"text":"Under its second rule, the Treasury must get this measure of debt falling as a share of GDP by 2029-30. "}],[{"start":229.25000000000003,"text":"In her 2024 Budget, Reeves announced an increase to capital investment by more than £100bn over five years. Details of her plans were set out the following year in the government’s June spending review. "}],[{"start":242.55000000000004,"text":"Some investors have signalled they will tolerate targeted changes to the fiscal strategy as a way of allowing more investment. "}],[{"start":249.70000000000005,"text":"Companies including Legal & General and Aviva wrote to Reeves in January arguing that development corporations — public bodies that drive new housebuilding and regeneration — should be able to “borrow outside the fiscal rules” in line with other European countries."}],[{"start":265.65000000000003,"text":"Addressing O’Neill’s ideas, Nick Ridpath of the Institute for Fiscal Studies said it was reasonable to argue that investment with “well-evidenced returns” would be more welcomed by the markets than unfunded current spending or tax cuts with the same upfront cost. "}],[{"start":281.20000000000005,"text":"But that was not the same as saying markets would reward it as much as reductions in borrowing, he added, warning that “having a lot of carve-outs can erode trust in the fiscal rules”. "}],[{"start":290.50000000000006,"text":"“There may be creative ways of further exploiting the flexibility offered by the switch to public sector net financial liabilities as a fiscal target, but the key thing for the markets is the amount of gilt issuance the UK government is undertaking,” said Andy King, a former OBR official who is now at Flint Global. "}],[{"start":309.90000000000003,"text":"“A big clever wheeze that needs you to issue an extra £20bn of gilts for investment might get you an adverse market reaction anyway.”"}],[{"start":325.95000000000005,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780657810_4474.mp3"}