THE NEW YORK TIMES: New Prime Minister faces old problems of how to make Britain’s economy grow

LONDON — One after the other, Britain’s recent prime ministers have pledged to revive the nation’s economy. One after the other, the promised growth eluded them.

Andy Burnham, set to formally become the newest prime minister Monday, has arrived with his own version of this pledge: “Good growth in every British postcode.”

His plan? Give away power to local officials so they can make their own economic choices. Mr Burnham has promised to bring about “the biggest change in our lifetimes to the way the country is run.”

Mr Burnham has not revealed the details of his economic agenda. But his priorities are emerging in his speeches and recommendations from advisers. The New York Times spoke with five economists and policy strategists who are playing a role in formulating Mr Burnham’s economic vision, several of whom spoke on the condition of anonymity to talk openly about policies that were still not final.

Alongside the so-called devolution of power, Mr Burnham has said he will bring more public utilities and services under public control, while quickly tackling the high cost of living.

But Mr Burnham will face the same economic challenges that befell his predecessors: a heavy public debt burden, stubbornly high inflation and low productivity growth. Those are compounded by the unavoidable legacies of the country’s decision a decade ago to leave the European Union, which has dragged on the economy, and years of too little public investment. Nervous consumers are saving a lot, rather than spending.

Mr Burnham faces formidable economic problems, but at their heart is stalled growth.

Britain’s economy has been sluggish since the 2008 financial crisis. Gross domestic product per person is just 7% higher than it was in early 2008, compared with more than 20% in the decade before the crisis.

“Growth is the big challenge the U.K. faces,” said David Aikman, the director of the National Institute for Economic and Social Research, an independent think tank. The country’s more enduring problems such as how to fund the clean energy transition and support an aging population “would look a lot easier if we had faster growth,” he added.

Many of the big economic troubles, like high debt and huge demands on public spending, aren’t unique to Britain. But Mr Burnham is bound by constraints of his — and his party’s — own making. Wary of spooking international buyers of British government debt and raising borrowing costs further, he has pledged to stick to strict rules on debt and spending made by Rachel Reeves, whom he is expected to replace as chancellor of the Exchequer in coming days. Mr Burnham will also inherit a party that promises not to raise any of the three biggest taxes in the country, including income tax.

Mr Burnham comes to the prime ministership after nearly a decade as the mayor of Greater Manchester in the north of England. The job gave him power over transport, housing, policing and skills development through adult education and training. Mr Burnham highlighted the virtues of local over central government control as a political signature and has promised to further devolve powers from Westminster nationwide.

Britain is “extraordinarily centralised,” said Diane Coyle, a professor of public policy at the University of Cambridge who has influenced economic policymaking in Manchester for much of the past two decades.

Power, especially over finances, is hoarded in London, a level of centralisation that is notable by international standards. Local governments have less ability to raise the funds they need than peer countries, according to data from the Organisation for Economic Cooperation and Development, or OECD.

Centralisation has led to two big, deeply entrenched problems — low growth and lagging prosperity in most of the country, and economic overheating in London and the southeast characterised by unaffordable housing. London’s productivity is 30 per cent higher than Britain’s average, and it has been that way for the past couple of decades.

Here, Manchester is instructive. The city, which was an industrial powerhouse in the 19th century, suffered through the second half of the last century amid rapid de-industrialisation. But it is staging a revival. The city has become a growth model with impressive amounts of inward investment and productivity gains. Mr Burnham’s hope is that Manchester’s resurgence, the seeds of which were laid before he became mayor, can be replicated across the country.

The critical advantages of devolution, Coyle said, is officials get better information about concerns like what skills local companies need in workers, and can better sync education and training policies to meet those demands.

The recommendation was echoed by the OECD, which said Wednesday that if Britain could shrink the gaps in regional productivity it could raise overall economic growth. Local policies could be used to get more young people into jobs and improve transportation, both major culprits in Britain’s regional inequality.

Getting there will be hard. Britain is a patchwork of local authorities, with overlapping boundaries and varying responsibilities. Some control policing. Others the collection of waste. As power has become centralised in London, the capacity to manage economic policy effectively has drained away from many parts of the country.

Britain has been left both “too fragmented and too centralised,” said Neil Lee, a professor of economic geography at the London School of Economics. Now there is a broader political consensus to try to address this, he added.

The departing government had said it was working on a plan to give local officials more control over how they spend a share of national taxes. Those efforts are in the early stages, and it remains to be seen how Mr Burnham will carry out his vision for devolution.

Several of his other proposals are also long-term in nature. Mr Burnham has said he will lay out a 10-year plan to bring down the cost of water, housing, energy and transportation by taking “greater public control” of these utilities and services. Given the fiscal constraints he will face, that probably means stronger regulation and more partnerships between government and companies, not widespread nationalisation.

Will any of this generate economic growth? Maybe, economists say, though not quickly.

In the short term, Mr Burnham faces a citizenry impatient for change and is expected to announce steps to tackle the cost of living.

The new government will hopefully do “a few eye-catching measures to address the cost of living,” maybe on energy prices, rent or social housing, said Danny Sriskandarajah, the CEO of the New Economics Foundation, a think tank that has been among those advising Mr Burnham.

The past few years have shown how the plans of Britain’s political leaders can be sent off course. The British economy is highly sensitive to shocks from events overseas because of its openness to trade and dependence on foreign bondholders.

At the start of this year, quicker economic growth and a reduction in borrowing seemed in sight, and inflation was expected to finally return to the central bank’s 2 per cent target. But then the U.S. and Israeli attacks on Iran set off a war that pushed up energy prices. Household energy bills have risen on average 13 per cent from a couple of months ago. Expectations of interest rate cuts, which would lower mortgage costs, have vanished.

Mr Burnham will have to fight through these shocks to deliver his own economic agenda, including an improvement in living standards.

Otherwise, disposable incomes, adjusted for inflation, will fall, Sriskandarajah said. “And no government is going to survive that.”

This article originally appeared in The New York Times.

© 2026 The New York Times Company