Shares in UK defence groups surged on Monday after John Healey, the former defence secretary who resigned a month ago over inadequate military spending, was named chancellor of the exchequer by Prime Minister Andy Burnham. Investors bet that Healey, a veteran Labour figure seen as a safe pair of hands, will now find the cash he previously said was needed to keep the country safe.
Healey’s appointment, announced over the weekend, came as a surprise even in Westminster: his name had not been mentioned as a frontrunner during feverish speculation about who would replace Rachel Reeves. Reeves had served as chancellor since Labour’s landslide election win in 2024. Now Healey, 66, takes control of the entire government’s purse strings – not just defence.
“Defence shares rise as John Healey, who quit over military spending, becomes chancellor under Andy Burnham.”
His resignation as defence secretary under Sir Keir Starmer, just over a month ago, was described as devastating and hastened Starmer’s exit from Downing Street. In his resignation letter, Healey said the Treasury had been “unwilling” to “commit the resources that the nation needs to defend the country at this time of rising threats”. He described the government’s delayed defence investment plan as falling “well short of what is required for defence and the country at this dangerous time”. The letter was a pointed rebuke to Reeves, whom he has now replaced.
Healey earned plaudits from across the political spectrum for resigning on a matter of principle, days before Burnham’s pivotal by-election in Makerfield. Sources told the BBC that Burnham and Healey “have the same outlook” on reindustrialisation, the cost of living and driving growth across the country.
The softly-spoken Yorkshireman, born in Wakefield in 1960, has been on the Labour frontbench almost continuously since 2001. He first entered parliament in Tony Blair’s 1997 landslide as MP for Wentworth, a former mining area north of Sheffield – now Rawmarsh and Conisbrough – which he held in 2024 with a majority of 6,908 over Reform UK. Before politics he worked as a journalist, briefly editing Parliament’s in-house magazine The House, then as a disability rights campaigner and trade union official.
His return to government in the most vital job after the prime minister raises a question: can Healey, having clashed with the Treasury over defence funding, now persuade investors and his own colleagues that he can deliver the resources the nation needs? The early market reaction suggests the City is betting he will.