Andy Burnham will walk into Downing Street on Monday as the next prime minister, but the identity of his neighbour in Number 11 remains the subject of fierce speculation – and at least one name is already moving markets.
Officially, Burnham's team says no decision has been taken and cabinet positions will not be announced until Monday. But that has not stopped the guessing, nor the jostling. According to the BBC, there have been “live discussions” about putting the home secretary, Shabana Mahmood, into the Treasury. The Financial Times, citing three sources close to Burnham, reports it as a certainty.
“Andy Burnham becomes PM Monday; pound rallies on reports Shabana Mahmood may be chancellor.”
Mahmood lacks an economics background, but as a senior minister on Labour's right she could reassure financial markets and smooth the transition. Kathleen Brooks, research director at XTB, said the markets were already rallying in relief, with the pound up about 1% against the US dollar this week. “It tells us two things about Andy Burnham's government: firstly, the market trusts Mahmood to take a sensible approach to economic policy, and to tackle the hard questions of welfare spending; secondly, Burnham is willing to have those to the right of the Labour party in his cabinet in key economic roles,” Brooks said.
Yet according to separate reports from the Press Association, Mahmood is keen to remain as home secretary and see through changes she has brought in to the asylum system. That has opened the door for others – and prompted unease on the left. The Times reported that left-wing Labour figures would much prefer Ed Miliband in the role. In late June, the former Labour leader was the bookmakers' strong favourite, and he is politically closer to Burnham than other rivals.
But opinions differ on whether Miliband would command the backing of the financial markets. Some see him as an inflation risk, pointing to his drive for net zero as energy secretary as partly responsible for the UK's high energy prices. Analysts say that reputation, whether accurate or not, could weigh against him.
Whoever gets the job will inherit a daunting in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran. Meanwhile, Burnham has vowed to be a prime minister for all corners of the UK, hoping to spend time at what has been described as a “new Number 10” in the North of England. Whether that vision proves a game-changer or a gimmick remains to be seen – but for now, all eyes are on Monday's announcement.
