Why Andy Burnham’s reforms could cause prime minister a headache

• The National Institute for Economic and Social Research (NIESR) has warned Prime Minister Andy Burnham and Chancellor John Healey that the UK has no capacity for further borrowing.
• NIESR forecasts inflation to rise to 3.8 per cent next year, potentially leading to further interest rate hikes, and economic growth is set to plummet to 0.1 per cent in the third quarter.
• The think tank states that new spending commitments, including Mr Burnham's £2bn pledges, must be funded through tax rises or spending cuts, not additional borrowing.
• Chancellor Healey faces a significant 4 per cent real spending squeeze, equating to approximately £24bn, by the end of the decade due to persistent inflation and high borrowing costs.
• NIESR also projects rising unemployment, pressure on living standards, and over a million young Britons remaining not in education, employment, or training (NEET) through 2030.

IN FULL

Burnham warned he will have to raise taxes or cut spending to fund his pledges