Andy Burnham is struggling to rein in a markets crisis today amid fears more painful tax rises are looming at the Budget.

The PM is set to run the gauntlet of PMQs this afternoon, after finally making his Commons debut yesterday.

But even allies were dismayed by his blustering performance in the House, where he blamed Brexit and even Thatcher for Britain’s problems but offered little policy substance.

Long-term supporter Jim O’Neill, a former minister and Goldman Sachs economist who recently turned down a job advising the PM, warned that the UK would be punished for the lack of a ‘sensible fiscal strategy’.

He insisted Mr Burnham must ‘get real’ on issues such as welfare and state pensions and his speech had been the ‘last thing’ markets wanted to hear. 

Lord O’Neill told LBC: ‘If your country is under the focus of ”can they come up with a sensible fiscal strategy” on a day when the markets think ”well no, you’re not showing any sign of it” you’re going to have a tough day… if it stays like this your mortgage rate is going up.’ 

Interest rates on gilts – one of the main ways the Government borrows money – rose during Mr Burnham’s statement, having hit multi-decade highs during the day. 

The flare-up in the Iran war, persistent inflation, and nerves about a potential AI correction have been pushing up the costs of state debt around the world, but the UK is seen as particularly vulnerable. 

Andy Burnham (pictured running today) is struggling to rein in a markets crisis today amid fears more painful tax rises are looming at the Budget

Long-term supporter Jim O’Neill, a former minister and Goldman Sachs economist who recently turned down a job advising the PM, warned that the UK would be punished for the lack of a ‘sensible fiscal strategy’

Interest rates on 10-year gilts went up as Mr Burnham made his speech to MPs yesterday

The interest rates on 30-year gilts are running close to multi-decade highs

The US and Tehran exchanged fire again overnight, putting more pressure on oil and gas prices. 

Experts have warned that Chancellor John Healey might now need to find tax hikes – or, less likely, spending cuts – worth up to £14billion to stabilise the finances at the Budget on October 28.

Mr Burnham has vowed that the Government will stick to fiscal rules, but also made a series of spending commitments and dismissed ‘crude cuts’ to benefits.

He hinted last night that a council tax revaluation – effectively a huge raid on residents of London and the South East – is still on the table.

Mr Healey has vowed to set out a path for defence spending reaching 3 per cent and then 3.5 per cent of GDP, although that schedule will not be revealed until next year. 

Left-wing think-tank the Resolution Foundation claimed in a report today that UK taxpayers contribute relatively little compared to other major economies – and could pay more.

‘There is a strong case that any benefits of increased defence spending will be broadly shared, so the tax rises needed to find this should be too, including higher rates on middle-earners,’ chief economist James Smith said.

Asked about comments by Lord O’Neill’s criticism as she toured broadcast studios this morning, Cabinet Office minister Sally Jameson said she disagreed.

She told Sky News: ‘I think it’s important we don’t over-read into individual comments people make, because I think Andy Burnham has been really clear that we are going to stick to those fiscal rules rigidly, and that fiscal responsibility is absolutely imperative.’

She added: ‘We’ve got to have controls on spending, and I don’t think Andy or anyone else has said any different to that.

‘But I think the key thing is having growth and bringing optimism back into this country.’

The new PM used his first statement to Parliament to set out a Left-wing vision for the country involving greater state control of the economy.

Kemi Badenoch said Mr Burnham’s plans would take the country backwards, adding that Labour’s £70billion of tax rises had ‘crushed the economy’

He said the Government would be ‘relentless’ in taking more control over nationalised utilities such as water and energy. And he claimed a new wave of devolution could drive economic growth.

Instead, Mr Burnham suggested he will try to reverse Thatcher’s reforms, widely credited with lifting Britain out of the economic stagnation of the 1970s.

Kemi Badenoch said the plans would take the country backwards, adding that Labour’s £70billion of tax rises had ‘crushed the economy’.

She ridiculed him for ‘still complaining about Margaret Thatcher’, adding: ‘He is living in the past. He wants to take us back to the 1970s.’