Andy Burnham's landslide victory in the Makerfield by-election has positioned him as the frontrunner to become the next prime minister following Sir Keir Starmer's resignation. Starmer stated that a new leader would be in place before parliament returns in September. Burnham's policies on taxes, borrowing, and spending are now under scrutiny, along with his potential choice for chancellor.
Fiscal Rules and Tax Pledges
Burnham has committed to the fiscal rules set by Chancellor Rachel Reeves and agrees that the UK needs a plan to reduce its debts. He also pledges to uphold the Labour Party's manifesto promise not to raise income tax or national insurance contributions for working people. However, he advocates for lowering water, energy, and rail fares through greater public control of key utilities and a push for re-industrialisation in northern England.
Market Concerns and Chancellor Choice
Financial markets are closely watching Burnham's potential appointment of a chancellor. Dan Coatsworth, head of markets at AJ Bell, noted that "Burnham's choice of chancellor if he becomes prime minister could have a major impact." Ed Miliband, currently in charge of energy and net zero, is a possible candidate. Economists Rob Wood and Elliott Jordan-Doak of Pantheon Macroeconomics suggested Burnham might "pitch to Labour MPs' left-leaning instincts for more spending, funded by higher taxes and moderately looser fiscal rules, as well as additional regulation."
Economic Risks and Spending Plans
Wood and Jordan-Doak added that Burnham would likely avoid a major fiscal overhaul to prevent a repeat of the gilt market meltdown that damaged the previous Conservative government's reputation. However, they noted that risks lean toward more spending. Kathleen Brooks, research director at XTB, stated that Burnham would need 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."
