Britain's economy is facing 'very, very substantial challenges'

See more Daily Mail on Google - save us as a Preferred SourceBy JOHN-PAUL FORD ROJAS, DEPUTY BUSINESS EDITOR Published: 22:25 BST, 4 September 2026 | Updated: 09:33 BST, 5 September 2026

Painful belt-tightening is needed to get a grip on UK debt, with the economy facing 'very, very substantial challenges', Andy Burnham has been warned.The governor of the Bank of England made the comments after turmoil on bond markets this week saw UK borrowing costs pushed to a 28-year high.Andrew Bailey, speaking at the London School of Economics, said: 'There are very, very substantial challenges at the moment, structural challenges.'These included ageing populations and the need for higher defence spending.It came as the Prime Minister was warned unless Britain starts to tackle its £2.9trillion debt pile now, it risks saddling the growing burden on future generations while leaving little to show for it. Without a plan for tax hikes and spending cuts of around £40billion, they will 'inherit the mortgage without the house', the National Institute of Economic and Social Research (NIESR) said.Global markets have been gripped by fears over inflation and soaring debt this week, resulting in a bond market sell-off which has caused government borrowing costs to spike across the world. Britain – which already pays the highest borrowing rates among all G7 economies – has been especially vulnerable at a time when investors are increasingly worried about how the Chancellor will make the sums add up in next month's Budget. UK Prime Minister Andy Burnham attended a preview event for the Bayeux Tapestry Exhibition in September Governor of the Bank of England Andrew Bailey attended the Bank of England press conference in July