The Budget looms

The OBR is currently preparing its first forecast under the new government, with the October Budget likely to provide the clearest picture yet of the economic picture Chancellor John Healey is faced with.

The scale of the challenge remains uncertain, but higher borrowing costs, persistent inflation and relatively weak growth have all put pressure on the public purse. The Times has reported a potential £10bn gap, while former Andy Burnham advisers Andy Haldane and Jim O’Neill have both raised concerns about the direction of policy and the need for difficult choices on tax and spending.

Tax rises are the most obvious way of filling any shortfall, and there is already plenty of speculation about which measures could be used - but it is probably too early to pick winners. The OBR’s assessment of growth and inflation will determine the size of the problem, while ministers have other options, including setting out tighter departmental spending plans.

That may prove difficult politically. The government has made a series of spending and investment commitments which will need to be funded, while also facing pressure to demonstrate to financial markets that its plans are sustainable. All the while, a persistent Kemi Badenoch is wondering aloud just how everything will be paid for.

For now, the focus will be on the OBR forecast and what it reveals about the government's room for manoeuvre, and it will be the Prime Minister and his Chancellor's first real test. To date, Andy Burnham has been relatively popular based on TikTok and vibes. That can only get you so far. And over the next six weeks, his job is about to get very much more real.