Sir Keir Starmer’s resignation has set off a race for the chancellorship, with Andy Burnham — the newly-elected Makerfield MP and almost certain next prime minister — expected to appoint a new occupant for Number 11 Downing Street. The current chancellor, Rachel Reeves, is likely to be replaced, leaving the incoming holder with a daunting in-tray: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran.
The bookmakers’ favourite is Wes Streeting, the former health secretary who threw his weight behind Burnham during the leadership contest. Loyalty could be rewarded, but Lord Jim O’Neill, the cross-bench peer and economist advising Burnham, has warned against that approach. “There are clearly some people pushing to be chancellor who feel they are owed it for their support,” he told the BBC, without naming anyone.
“Andy Burnham is expected to pick a new chancellor after Starmer’s resignation, with Streeting and Miliband leading the race.”
Streeting’s politics differ from Burnham’s — Burnham is seen as keener to spend — and Simon French, chief economist at Panmure Liberum, called Streeting a “relatively market-friendly option” because of his pro-growth comments. Yet French also flagged a political risk: Streeting might one day want to be prime minister. “Politics is what politics is. It’s a popularity contest,” he said.
Ed Miliband, the former Labour leader and energy secretary, is the second favourite. He is politically closer to Burnham, which Paul Johnson, former director of the Institute for Fiscal Studies, sees as a strength. “You really don’t want people in Number 10 and Number 11 having very different views,” Johnson said.
Opinion is split on whether Miliband could reassure the markets. Nick Macpherson, the former permanent secretary at the Treasury, told the Financial Times: “The key to gaining the confidence of the markets is to articulate, implement and deliver a coherent strategy. Miliband is one of the few cabinet members with the intellect, experience, and authority to do that.” Others, however, view his net-zero drive as energy secretary as partly responsible for high UK energy prices, branding him an inflation risk. Analysts say that reputation, accurate or not, could sway bond markets.
Whoever takes the job will face soaring expectations — and a perilous economic landscape.