Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory organisations, warns that tax rises and increased government borrowing appear almost inevitable under new Prime Minister Andy Burnham. The deVere Group offers comprehensive financial guidance to clients globally. Green’s warning follows Burnham’s recent admission that the National Health Service will “collapse” without social care reform, alongside new spending commitments totalling over £1.7 billion last week, even before the autumn Budget.
Bond markets reacted swiftly to the new administration. The 10-year gilt yield climbed above 5%, with the 30-year yield reaching a two-month high of 5.75% after the Prime Minister spoke of fiscal flexibility. This immediate market movement indicates investors are already pricing in risk, Green states. The fiscal challenge is stark: public borrowing hit £23.3 billion in May, a 30% increase year-on-year, with public debt exceeding 95% of GDP, the highest level since the 1960s.
Green suggests two primary funding routes for these pledges: higher taxes or increased borrowing. Households should anticipate potential adjustments to income tax thresholds, dividends, capital gains, and pensions relief. Relying on borrowing carries costs, directly impacting families through higher mortgage rates; lenders already adding up to 0.35 percentage points onto fixed rates. These pressures are compounded by existing defence commitments, projecting an estimated £36 billion annual cost by 2035.
The deVere CEO stressed that the upcoming autumn Budget will be the critical moment for the government to outline its financial strategy, determining its credibility or risking a repeat of the 2022 “mini-Budget” scenario. Green advised savvy investors, business owners, and families not to wait for the Budget’s details but to explore options to diversify away from concentrated UK exposure now, acting proactively ahead of anticipated market shifts.
