Arthur Laffer, one of America’s most prominent economists and a former adviser to three US presidents, has issued a stark warning to Prime Minister Andy Burnham over Britain’s fiscal trajectory.
Laffer, who advised Ronald Reagan, Bill Clinton and Donald Trump on economic policy, told Burnham that the UK is “taxing itself to death” ahead of next month’s Budget.
Writing in The Telegraph, Laffer said: “I would love to see Britain become prosperous. That’s my dream. [But] your record is not illustrating a good set of policies.”
He continued: “It’s really indicating exactly what you see when [an] economy gets in the death spiral.”
Laffer delivered a blunt diagnosis of Britain’s economic troubles, saying: “I have never heard of an economy being taxed into prosperity. What’s happening is, Britain is taxing itself into death.”
He added: “Your problem is not too little revenue. Your problem is too little growth, too little prosperity.”
Laffer is best known for coining the Laffer Curve, a theory holding that tax revenues will ultimately fall once rates are pushed beyond a certain threshold.
The economist warned that any further tax increases in the upcoming Budget would deepen concerns that the government is losing its grip on the public finances.
His intervention comes as global borrowing costs have surged to record levels in recent weeks, driven by investor fears over inflation linked to the Iran war and heavy spending on artificial intelligence.
The turbulence first struck the US Treasury in mid-August, pushing Treasury secretary Scott Bessent into an emergency measure to double the volume of government bond buybacks.
The contagion then spread to the UK, where the yield on the 10-year gilt soared to 5.294 per cent, the highest level recorded since the 2008 global financial crisis.
The bond market rout threatened to cast a shadow over the opening of Burnham’s first parliamentary session as Prime Minister, prompting him to pledge that his government would be “grounded in fiscal responsibility.”
Lord Jim O’Neill, a former economic adviser to Burnham who declined a formal role in his government, urged the Prime Minister to act swiftly to reassure investors.
O’Neill said bond markets would respond positively if Burnham took “credible action to deal with the excesses of the triple lock or the excesses of welfare spending.”
The combination of rising yields, external warnings from respected economists, and political pressure from former allies signals that Burnham faces a significant test of economic credibility in the weeks ahead.