In a little more than a week, Andy Burnham will walk through the door of Downing Street as the new prime minister, taking over from Sir Keir Starmer. But the outgoing chancellor, Rachel Reeves, has a warning: without a worked-through plan, governing Britain will be hard, and shocks and challenges will come his way fast. This transition of power—the first in two years since Labour took office—raises big questions about what happens when a new leader inherits an economy still under pressure, and how the country prepares for the handover.
The change is happening because Starmer's government lost the confidence of Labour MPs and the public. As Reeves put it, "People are impatient for change—I'm impatient for change and I totally get that people want to see their lives changed faster." Burnham, the current mayor of Greater Manchester, secured the backing of 322 of Labour's 403 MPs, leaving him just one short of the number required to make a rival challenge mathematically impossible. If no one else enters the contest, he is expected to become Labour leader on 17 July and prime minister the next working day, 20 July.
“Explains the UK government transition from Starmer to Burnham and the economic challenges ahead”
Reeves, in what is likely to be one of her last major interviews as chancellor, spoke to the BBC's Laura Kuenssberg from the lavish 17th Century state rooms of No 11 Downing Street. She stressed that Burnham needs to be "really clear about what they want to achieve" and must "stay laser-focused on those things that have always motivated him." She also pushed back on any suggestion that her decisions—like cutting the winter fuel allowance for millions of pensioners—were mistakes, instead pointing to the "big picture": lower government borrowing costs, falling inflation from its peak, increased infrastructure investment, and the economy growing faster than the UK's nearest competitors.
However, the economy is far from fixed. Inflation remains above target and is expected to rise, growth has been slow, and the Bank of England has warned that interest rates might have to go up again. National debt is projected to be higher at the end of this parliament than when Labour moved in. Firms and families are still under pressure, with the latest ONS figures showing disposable income squeezed. Reeves acknowledged that if she could go back two years, there are choices she would make differently.
For UK readers, this handover matters because it directly affects the policies that shape daily life. Burnham has already set out a vision centred on the "biggest rebalancing of power Britain has ever seen," including a new No 10 North hub to move power and resources from Whitehall across the country. He has hinted at an early package of cost-of-living support, accepting that "people can't wait for ever for change." But with the economy fragile, any new spending will be constrained. The transition also raises questions about continuity: Reeves said she is handing over "an economy that is much stronger than the one I inherited from the Conservatives," but the Bank of England's warning about potential rate rises shows how quickly the picture can change.
Q: Why is Rachel Reeves leaving No 11? Reeves is leaving because Sir Keir Starmer's government lost confidence and Andy Burnham is set to become prime minister. In her final major interview, she indicated she does not expect to stay on as chancellor, though the incoming PM's team has not yet announced who will replace her.
Q: What challenges will Andy Burnham face as prime minister? Burnham will inherit an economy with inflation above target and rising, slow growth, high national debt, and the possibility of interest rate increases. He also faces public impatience for faster change. Reeves has warned that "lots of challenges and shocks will come his way."
Q: What is Burnham's plan for governing? Burnham has outlined a plan to "rebalance power" in the UK, including a new No 10 North hub. He has signalled early cost-of-living support and a focus on reviving hope among frustrated voters. But he has not yet published a full detailed agenda for the first months in office.
What happens next is tightly scheduled. If no rival enters the Labour leadership contest, Burnham will become leader on 17 July and prime minister on 20 July. The incoming team has been tight-lipped about ministerial appointments—including the next chancellor—so the full picture of the new government will only emerge after Burnham takes office.