Sir Keir Starmer resigned as prime minister and Labour leader on Monday, and Andy Burnham — who won a special election in Makerfield this month and was sworn in as an MP on Monday — is widely expected to become the next UK prime minister. Many believe Burnham will want a new chancellor to replace the current occupant of Number 11 Downing Street, Rachel Reeves, who is closely tied to Starmer.
The next chancellor will face an array of challenges: high debt, low growth, welfare reform, defence spending demands, and the economic fallout from the US-Israel war with Iran. Burnham has said he would stick to Reeves’ fiscal rules, and Reeves was present in Burnham’s Westminster photoshoot after he was sworn in as MP, but she was notably absent from Starmer’s resignation speech.
Wes Streeting, who ran against Starmer and Burnham in the Labour leadership contest and then threw his weight behind Burnham, is the bookies’ favorite for the job. Economist and cross-bench peer Lord Jim O’Neill, who has been providing advice to Burnham, told the BBC: “There are clearly some people pushing to be chancellor who feel they are owed it for their support.” Though he did not name anyone, O’Neill’s comment appeared to reference loyalty-based claims to the role.
Simon French, chief economist at consultancy Panmure Liberum, described Streeting as a “relatively market-friendly option” because of his pro-growth comments, but also noted a political risk: Streeting might someday want to be prime minister himself. “Politics is what politics is. It’s a popularity contest,” French said.
Ed Miliband, the former Labour leader and current energy secretary, is the bookmakers’ second-favorite pick. Paul Johnson, former director of the Institute for Fiscal Studies, said having Miliband and Burnham in Number 10 and Number 11 would be a positive alignment. “You really don’t want people in Number 10 and Number 11 having very different views,” Johnson said.
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.”
However, some analysts see Miliband as an inflation risk, blaming his drive for net zero as energy secretary for the UK’s high energy prices compared to other countries. Analysts told the BBC that reputation, whether accurate or not, could affect how bond markets react to his time as chancellor.
The Unite union’s general secretary, Sharon Graham, said Miliband as chancellor would be a “noose around the neck” of job creation because of his opposition to new oil and gas drilling in the North Sea.
Pat McFadden, the current work and pensions secretary, is seen as a less likely option but the most qualified pick by some observers. He has held shadow Treasury jobs, served as a business minister in a previous Labour government, and now oversees the welfare portfolio that many say will be any future chancellor’s biggest task.
Panmure Liberum’s French said the markets may view McFadden as “the safest pair of hands” out of those in the running and will either react positively or neutrally if he were picked. But if Burnham is looking for a clean break from the previous government, he will likely overlook the Starmer loyalist.
Foreign Secretary Yvette Cooper could be a surprise compromise pick. She served as chief secretary to the Treasury under Gordon Brown and sits politically between Miliband and McFadden or Streeting. Danni Hewson, head of financial analysis at financial services firm AJ Bell, called her a “middle of the road” option but also “a bit more of an unknown.”
There is also the possibility that Chancellor Rachel Reeves simply keeps her job, though it is seen as unlikely given how tied she is to Starmer. Lord O’Neill said the advice he has given Burnham is to “figure out what his priorities are as prime minister before he picks a chancellor.” If Burnham does so, Reeves may well stick around for now.
Wildcard candidates include Home Secretary Shabana Mahmood, reported to be financially conservative but with limited economic experience; former defence secretary John Healey, who publicly quit because he did not believe the government was spending enough on defence; chief secretary to the prime minister Darren Jones; and former chief executive of the Resolution Foundation Torsten Bell.
Paul Johnson cautioned that picking Healey would essentially commit Burnham to meeting that defence spending demand. “If I was Andy Burnham, I would not want to tie myself to that particular pillar that quickly,” he said.
As Lord O’Neill put it: “The ones whose names are in the papers are the ones who are putting themselves forward.”