The race to become the UK's next chancellor is intensifying as Andy Burnham prepares to move into Downing Street on Monday, following the resignation of Sir Keir Starmer. The person who takes the Treasury's top job will inherit an in-tray stuffed with challenges: high debt, low growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran.
The chancellor of the exchequer is the UK's chief finance minister, responsible for setting tax and spending policies. They live at 11 Downing Street, next door to the prime minister. Officially, Burnham's team says no decision has been made and cabinet positions won't be announced until Monday. But speculation has focused on two main candidates: Home Secretary Shabana Mahmood and former Labour leader Ed Miliband.
“Explains the race to be UK chancellor as Andy Burnham becomes PM, with candidates and implications.”
The role gained its modern significance after the 1997 Labour landslide, when the then-chancellor Gordon Brown was given sweeping control over economic policy, creating the so-called 'dual monarchy' at the top of government. Since then, the chancellor has often been seen as the second most powerful person in the cabinet. The current economic context – with high national debt, sluggish growth, and pressure to reform welfare and boost defence spending – makes the appointment especially consequential.
For UK readers, the choice of chancellor will directly affect their finances. The chancellor sets income tax, corporation tax, VAT, and decides public spending levels. Market reactions to the appointment can influence the value of the pound and interest rates. According to analysts, reports that Mahmood could become chancellor have already pushed the pound up about 1% against the US dollar this week, suggesting investors trust her to take a 'sensible approach'. However, she lacks an economics background, and some on the left of the party prefer Miliband, who has previous Treasury experience but is seen by some as an inflation risk due to his net-zero drive as energy secretary.
Q: Who is frontrunner to be the next UK chancellor? Home Secretary Shabana Mahmood is the name most heavily rumoured. The BBC has been told of 'live discussions' about her moving to Number 11, and the Financial Times reports it as a certainty based on sources close to Burnham. However, separate reports say Mahmood is keen to remain as home secretary to see through asylum system changes.
Q: What would Ed Miliband's appointment mean? Ed Miliband, the current energy secretary, was the bookmakers' strong favourite in late June. He is politically closer to Burnham than other rivals, but opinions differ on whether financial markets would back him. Some analysts blame his net-zero policies for high UK energy prices, and that reputation could affect borrowing costs.
Q: What challenges will the new chancellor face immediately? The incoming chancellor must tackle high national debt, low economic growth, welfare reform, defence spending, and the economic fallout from the US-Israel war with Iran. Additionally, reports suggest Burnham may allow new oil and gas drilling in the North Sea – a policy shift that has drawn criticism from the Greens but aligns with US messaging.
No cabinet announcements are expected until Monday. Markets will be watching closely for the first signals of Burnham's economic direction. The new chancellor will also need to navigate internal party divisions – Mahmood's appointment would upset the left, while Miliband might struggle for market confidence.