UK Prime Minister Andy Burnham faces £330bn annual fiscal gap

Britain’s public finances are projected to lose about £330 billion ($442 billion) each year, driven by weak economic growth, an ageing population and rising health costs, according to the Resolution Foundation. The report warns that the incoming prime minister, former Manchester mayor Andy Burnham, who is set to replace Keir Starmer, will need a new fiscal strategy to avoid deeper borrowing, spending cuts and tax hikes.

Two‑thirds of the shortfall stems from a slowdown in per‑person growth since 2007. The think‑tank recommends replacing the triple‑lock pension increase with a link to average earnings, reforming fuel duty as electric‑car adoption cuts receipts, and boosting public‑service investment to offset falling productivity. It also notes that the war in Iran has reduced the government’s fiscal headroom from £23.6 billion in March to about £10 billion now.