Who Will Be the Next Chancellor of the UK? Runners and riders of Number 11

With Sir Keir Starmer standing down, Andy Burnham, the newly elected MP for Makerfield, looks certain to be the next prime minister. The big question now running Westminster, and the markets, is who to put next door in No 11.

Many in the group believe that Burnham will seek her own chancellor instead of retaining the current incumbent, Rachel Reeves. Anyone who takes the keys to the Treasury receives a terrible in-tray: high debt, sluggish growth, an unfinished program of social reforms, increased defense obligations and economic collapse from the US-Israel war with Iran. It’s a list that can test even the most experienced operators, and the choice is important beyond Whitehall. Burnham’s arrival has already unsettled business people, with eight out of ten SME owners telling Business Matters they fear what his premiership will mean for their company.

Here are the names in the second most powerful job in British politics, and what each could mean for your finances.

Wes Streeting

The bookie’s favorite is former leadership contender, Wes Streeting. Having thrown his weight behind Burnham instead of driving himself, it is conceivable that the former health secretary would be rewarded with a second job for his honesty.

Not everyone is convinced that loyalty should be the deciding factor. Lord Jim O’Neill, an economist and distinguished peer who advises Burnham, warned against this approach. Without naming names, he told the BBC: “It is clear that there are people who want to be chancellor who feel that they owe them their support.”

There is also the question of measurement. Although Burnham would appreciate Streeting’s support, the sentiments of the two men differ, with Burnham seen as the more serious spender of the two. Simon French, chief economist at consultancy Panmure Liberum, describes the road as a “marketable option” on the strength of his pro-growth language, but he also poses a political risk: a chancellor who could one day seek the top job himself. As for the suggestion that Streeting could be given a supporting role instead of his talent, French is unequivocal: “Politics is what politics is. It’s a popularity contest.”

Ed Miliband

The bookies’ second favorite is Ed Miliband, the former Labor leader, who is closer to Burnham politically than Streeting. Paul Johnson, former director of the Institute for Fiscal Studies, sees that consensus as a strength. “You really don’t want the people in No. 10 and No. 11 to have very different views,” he said.

Whether a former Treasury adviser like Miliband can win the markets is highly contested. Nick Macpherson, former permanent secretary at the Treasury, told the Financial Times: “The key to gaining the confidence of the markets is to talk, implement and deliver a coherent strategy. Miliband is one of the few cabinet members with the intelligence, experience and authority to do that.”

Others see the risk of inflation. Critics blame his lack of ambition as energy secretary for the UK’s high energy prices compared to his peers, and analysts say the reputation, fair or not, could color how bond markets greet him. Sharon Graham, general secretary of the Unite union, has gone further, warning that a Miliband chancellorship will 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

Considered a longer shot than Streeting or Miliband, Pat McFadden is considered by some to be the most qualified of the lot. He has held Treasury briefings, served as business minister in the previous Labor government and is the current work and pensions secretary. It’s that last role that could come true, giving him a head start on what many expect to be the chancellor’s next big job: welfare reform.

Panmure Liberum’s French believes the markets would consider McFadden “the safest hand” among the runners, reacting positively or shrugging if he is selected. The catch is political. If Burnham is hunting for a clean break from the Starmer era, he will likely look more than a loyal servant of the outgoing regime.

Yvette Cooper

Foreign Secretary Yvette Cooper could be the candidate. He brings years of experience in government, having served as chief secretary to the Treasury under Gordon Brown, and sits somewhere between Miliband on the one hand and McFadden or Streeting on the other. Danni Hewson, head of financial research at AJ Bell, calls him “middle of the road”, but also “a lot of unknowns”.

Rachel Reeves

It is still possible for the incumbent to stay. It seems unlikely, given how close Reeves is to Starmer, but several bookmakers are still betting on no change at the Treasury this year.

Lord O’Neill says his advice to Burnham is to “find out what his priorities are as prime minister before he chooses a chancellor”. Follow that advice and Reeves might still survive, at least for now. Burnham has previously said he will stick to his fiscal policies, and the chancellor appeared in his Westminster portraits after being sworn in as an MP on Monday. He was apparently absent from Sir Keir’s resignation speech.

And the rest

Beyond the front runners sits a long list of wild cards. The Secretary of the Interior, Shabana Mahmood, is reported not to play but has knowledge of economics, she is one. Former defense secretary John Healey, who resigned publicly over what he saw as insufficient defense spending, is one, although Paul Johnson warned that appointing him would amount to a commitment to spending itself. “If I were Andy Burnham, I wouldn’t want to commit to that pillar so soon,” he said.

Bookmakers and Westminster negotiators have also dismissed Darren Jones, the prime minister’s senior secretary, and Torsten Bell, the former chief executive of the Resolution Foundation, as outside bets.

Whoever gets the job, the background is unforgiving. The Office for Budget Responsibility has warned that the UK’s public finances are in a very vulnerable position and face increasing risks, leaving little room for error. That’s why the markets, and business owners looking for an end to the “drift and lag” after Starmer’s exit, will scrutinize the appointment carefully.

Currently, all names on the list are looking for a role. As Lord O’Neill put it: “Those whose names are on the papers are the ones who put themselves first.”