Andy Burnham is the frontrunner to become Labour leader and Prime Minister following Sir Keir Starmer's resignation, after his commanding victory in the Makerfield by-election on Friday. Sir Keir confirmed a new prime minister would be installed before parliament reconvenes in September, with Mr Burnham widely tipped as the favourite to succeed him.
Fiscal Policy: Taxes and Borrowing
Among the most pressing questions surrounding Mr Burnham's potential premiership are his stance on taxation, public borrowing and expenditure, along with his likely choice for chancellor should he secure the position. Mr Burnham has indicated he would maintain the fiscal framework established by Chancellor Rachel Reeves and has acknowledged that the UK requires a strategy to diminish its debts. He has also pledged to honour the Labour party's manifesto commitment not to increase income tax or national insurance contributions for working people.
Nevertheless, the politician has emphasised the necessity of reducing water and energy bills alongside rail fares, having previously championed greater public oversight of essential utilities and the "re-industrialisation" throughout northern England.
Impact on Wages and Bills
Mr Burnham's focus on lowering energy and water bills could provide relief to households. He has also advocated for reducing rail fares, which may benefit commuters. However, his plans for re-industrialisation in the North may create jobs but could also require significant public investment.
Chancellor Choice and Market Reactions
One of the principal concerns for financial markets centres on who might assume the chancellorship within a reshaped Cabinet. Dan Coatsworth, head of markets for AJ Bell, observed: "Burnham's choice of chancellor if he becomes prime minister could have a major impact." Ed Miliband, presently overseeing energy and net zero, has emerged as a potential contender for chancellor. Rob Wood and Elliott Jordan-Doak, economists at Pantheon Macroeconomics, suggested Andy Burnham could "pitch to Labour MPs' left-leaning instincts for more spending, funded by higher taxes and moderately looser fiscal rules, as well as additional regulation."
They went on to say: "We think Mr Burnham would be wary of a big bang fiscal change, because he needs to avoid a repeat of the gilt market meltdown that torched the previous Conservative government's reputation for economic competence. But risks clearly lean to more spending."
Meanwhile, Kathleen Brooks, research director at XTB, warned that Mr Burnham would have to "work to persuade financial markets that he is the right man for the job to grow the UK economy and get debt back under control."
