U.K.’s Burnham to meet Trump as aides blame U.S. leader for economic headwinds

British Prime Minister Andy Burnham is about to come face-to-face with the man his own officials blame for the U.K. government’s economic predicament: Donald Trump.

Britain’s new leader — still trying to cling to the optimism that has characterized his first two months in office — is due to meet the U.S. president at the U.N. General Assembly this week.

But privately, Burnham’s aides have grown alarmed that the president’s actions mean the coming winter could see rises in energy bills, inflation and interest rates, threatening the new premier’s defining promise to lower the cost of living. That realization appeared to bring Burnham’s honeymoon toward a shuddering halt this week, a situation a senior Labour official said was all down to Trump.

Burnham’s priority is to persuade Trump to release stockpiles of Patriot air defense missiles so they can be provided to Ukraine by winter. He’ll also discuss how Europe can help reduce disruption in the Middle East, according to people familiar with the matter. Like others for this story, they spoke on condition of anonymity in order to be frank about the sensitive U.S. relationship, the mood in government, and preparations for the U.K. budget next month. 

As a result of those international headwinds, Burnham’s team is increasingly concerned Chancellor of the Exchequer John Healey’s first budget on Oct. 28 will be gloomier than previously expected. On Wednesday, the prime minister acknowledged the problems, vowing to make “difficult decisions to make sure the economy remains on track.” 

“It’s going to be challenging because the picture around the world is challenging,” he said. 

It’s a shift in tone from the optimism Burnham has radiated until now, as the government tries to prepare the public for more turbulent times. Concerns are now mounting within Labour that the months ahead will forge a narrative that the premier is the same as the man he replaced.

Burnham and Healey’s respective predecessors, Keir Starmer and Rachel Reeves, were widely criticized for gloomy communications on taking office. A Reeves ally joked Burnham now sounded like her.

Burnham’s Labour critics say a collision with reality was inevitable. The new premier is heavy on vibes, but light on substance, Starmer’s allies say. In their eyes, he’s focused on likeability and communications but lacks a plan to confront the geopolitical headwinds threatening the economy. 

Some executives who attended a speech by Healey in Downing Street this week left underwhelmed at the lack of fresh ideas. One said Reeves could have given the same speech. Another said it was a step down from the former chancellor, arguing she was more confident and across the detail.

Officials also fret Downing Street has been slow to see what was coming. For months the Treasury has forecast the Iran war posed growth and inflation risks, so it surprised some officials that Burnham decided to define his premiership around quickly alleviating the cost of living, something not entirely in his gift.

No. 10’s primary concern is energy bills. Officials have been buoyed by evidence that policies to cut them, while costly, in part pay for themselves by lowering inflation and gilt yields. They are looking at other ways to reduce bills in the budget, but are clear-eyed that the looming rise in the Ofgem price cap due to rising wholesale energy prices means voters won’t notice any new policies.

One Labour Member of Parliament said Burnham’s circle took false hope from a bounce in opinion polls which saw the governing party overtake Nigel Farage’s Reform U.K. immediately after he took office. That crossover coincided with damaging media revelations about Reform’s finances and a series of scandals engulfing Farage, meaning Burnham’s poll boost was a mirage, the MP said.

They added that by adhering to Labour manifesto promises ruling out raising the main tax rates, maintaining the pensions triple lock and imposing strict limits on renegotiating Britain’s relationship with the European Union, Burnham and Healey risk being seen to be tinkering at the edges rather than delivering the promised generational transformation.

But Healey is hamstrung by a gap of at least £12 billion ($16 billion) that’s opened up in his fiscal headroom, and there are little signs that’ll improve much before the budget. 

After bringing the cold realities of governing into focus for Burnham this week, the economic fallout from the conflict in the Middle East will be at the forefront of Burnham’s mind during his encounter with Trump at UNGA. 

The war has sent oil prices toward $110 a barrel and sparked a global bond selloff. U.K. borrowing costs have risen just as the budget watchdog prepares its forecasts, raising the prospect the government will need to raise taxes or cut spending just to restore a credible fiscal buffer.

The Bank of England held interest rates on Thursday, but governor Andrew Bailey warned it’d have to hike if the U.S.-Iran war continued, and traders see multiple quarter-point rises over the next year. Bloomberg Economics warned this week that household energy bills could rise 25% over the winter. The longer the disruption continues, the more likely such a scenario will crystallize, leaving Burnham struggling to show Britons he has made them better off. 

Meetings between U.S. presidents and British prime ministers are always keenly watched by the U.K. media for signs of fractures in the so-called special relationship. That’ll be no different at their expected head-to-head on Tuesday and, as always with Trump, there will be an air of unpredictability, not least because the two men are far from ideological bedmates. 

The leaders have spoken several times by phone since Burnham came to power, and Trump has described his new counterpart as a “very nice guy” if somewhat “on the liberal side” — a negative epithet for the U.S. president. 

He’s also laid the ground for disagreements over Northern Ireland — saying he’d love to see Ireland unified — and the Falkland Islands, suggesting he might not come to the U.K.’s aid in any conflict with Argentina. 

Burnham’s predicament isn’t just down to Trump and the Middle East. Investors remain on edge over his lack of policy clarity and whether he’ll live up to his public commitments to fiscal discipline. 

It’s notable that former Goldman Sachs chief economist Jim O’Neill and former Bank of England chief economist Andy Haldane — who both advised Burnham before he became premier, have both since criticized his economic strategy. Haldane told LBC radio this week that markets “suspect that this is a traditional tax-and-spend socialist government with better TikTok videos.”

The darkening mood appears to have ended a conversation in Labour, still live in the last few weeks, over whether Burnham might roll the dice and call an early general election. Going to the polls early next year, some Labour officials had argued, would take advantage of Farage’s current weakness. But doing so amid tax rises, energy bill increases and interest rate hikes would be extremely ill-advised, a person close to Burnham said.