The next person to take charge of the UK's finances will face a brutal in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran. With Sir Keir Starmer resigning as prime minister, Andy Burnham is almost certain to become the next Labour leader and prime minister. And many believe he will want a new chancellor to replace Rachel Reeves, the current occupant of Number 11 Downing Street. The race to be Britain's next chancellor is on.
The chancellor of the exchequer is the government's chief financial minister, responsible for setting taxes, spending, and economic policy. They produce the annual Budget and are one of the most powerful figures in British politics, second only to the prime minister. The appointment is made by the prime minister, who can choose anyone they want – typically a senior MP or, in rare cases, a peer from the House of Lords.
“Explains the race to become UK chancellor after Starmer's resignation, the role, and key candidates.”
The bookmakers' favourite to become chancellor is Wes Streeting, a former contender for the Labour leadership who threw his weight behind Burnham. The thinking is that Streeting could be awarded the number-two job for his loyalty. However, some observers warn that Streeting's politics differ from Burnham's – Burnham is seen to be inclined to spend more, while Streeting is a "relatively market-friendly option" because of his pro-growth comments, according to Simon French, chief economist at consultancy Panmure Liberum. There is also a political risk: Streeting might someday want to be prime minister himself.
The second favourite is Ed Miliband, the former Labour leader who is politically closer to Burnham. Paul Johnson, former director of the Institute for Fiscal Studies, sees that as positive: "You really don't want people in Number 10 and Number 11 having very different views." Nick Macpherson, the former permanent secretary at the Treasury, told the Financial Times that Miliband has the "intellect, experience, and authority" to articulate a coherent economic strategy. However, others see Miliband as an inflation risk, blaming his drive for net zero as energy secretary for the UK's high energy prices. Analysts say that reputation, whether accurate or not, could affect how bond markets react to his time as chancellor.
A wildcard is Lord Jim O'Neill, an economist and cross-bench peer who has been advising Burnham. O'Neill has warned against giving the job to someone who feels "owed it for their support" rather than for their abilities. Whoever gets the role will need to win the confidence of financial markets quickly – the UK's high debt and the need for credible fiscal plans mean any chancellor will be under intense scrutiny from bond investors and the International Monetary Fund.
For UK readers, the choice of chancellor directly affects household finances: tax rates, public spending on services like the NHS and schools, and the cost of government borrowing, which influences mortgage rates and pensions. A chancellor seen as fiscally reckless could push up interest rates; a cautious one might squeeze public services. The next chancellor will also have to decide how to fund increased defence spending and manage the economic shock from the Iran conflict.
Q: What is the role of the UK chancellor? The chancellor of the exchequer is the government's top finance minister, responsible for setting tax and spending policy, presenting the annual Budget, and managing the UK's debt and economic strategy. They are typically the second-most powerful person in government after the prime minister.
Q: Who are the frontrunners to be the next chancellor? The two main candidates are Wes Streeting, a former health secretary and the bookies' favourite, and Ed Miliband, the former Labour leader and energy secretary. Both are senior Labour MPs with different economic reputations: Streeting seen as market-friendly, Miliband as more left-leaning and linked to green spending.
Q: How is the chancellor chosen? The prime minister appoints the chancellor, usually from among the members of their own party in the House of Commons. The appointment is entirely at the prime minister's discretion, though political loyalty, economic expertise, and the need to reassure financial markets all play a part.
What happens next? Andy Burnham is expected to become prime minister in the coming weeks after Starmer's resignation. He will then announce his cabinet, including the new chancellor. The appointment could come as soon as late June or early July 2026. The new chancellor will then face an immediate test: their first official statement to Parliament, likely a mini-Budget or fiscal update, and the reaction of the bond markets.