Markets will watch Burnham’s chancellor choice closely, deVere warns
deVere Group chief executive Nigel Green has warned that Andy Burnham’s first major economic test will be his choice of chancellor, with markets sensitive to speculation over Ed Miliband’s potential appointment.
Markets will closely watch Andy Burnham’s choice of chancellor as he prepares to take office, according to deVere Group.
The financial advisory organisation said the Treasury appointment would be Burnham’s first major test of economic credibility.
The comments come amid speculation over the next chancellor, with Ed Miliband, Shabana Mahmood and Yvette Cooper all linked to potential senior roles.
deVere said investors had already shown concern over speculation around a possible Miliband appointment, with gilt yields rising during the debate over who could take over the Treasury.
Nigel Green, chief executive at deVere Group, said: “Markets have already told Burnham exactly what they think of Ed Miliband running the Treasury. Gilt yields hit multi-decade highs the moment his name entered the frame as a serious contender, and the message could not have been clearer. Investors don’t want to find out what a Miliband Treasury looks like in practice.”
Green continued: “Miliband carries a reputation among institutional investors as fiscally expansive and instinctively wary of business.
“His record on blocking new oil and gas licences, his slow approach to approving the Jackdaw and Rosebank fields, and his uncompromising stance on net zero all read to bond investors as a government prepared to spend first and count the cost later.
“Bond markets punished Liz Truss’s government for precisely that instinct during the 2022 mini-budget, when unfunded pledges sent gilt yields into freefall and forced the Bank of England into emergency intervention. Investors have long memories, and they won’t extend the benefit of the doubt to a second Chancellor within four years.”
Green said the impact would not be limited to gilt markets, adding: “Sterling is already trading near the bottom of its 2026 range against the dollar, and a Miliband appointment would pile fresh pressure on the pound just as households absorb higher energy costs from the Hormuz crisis.
“Combine that with a Chancellor markets regard as unfunded and unpredictable, and you invite the kind of currency and bond selloff that pushes up borrowing costs for mortgages, businesses, and the government itself.”
Green said alternative candidates would send a different signal to investors, adding: “Shabana Mahmood or Yvette Cooper would send a fundamentally different signal.
“Both are viewed as pragmatic and disciplined, and neither is expected to tear up the fiscal rules that have kept gilts comparatively stable through the uncertainty of a leadership change.
“Markets don’t need a radical Chancellor right now. They need continuity and credibility, and either name would, potentially, deliver both.”
He added: “Burnham has been careful so far. He’s repeatedly signalled respect for the existing fiscal framework, and that caution has bought him a grace period with investors who might otherwise have marked gilts down further already.
“Installing Miliband at the Treasury would spend that goodwill in a single afternoon.”
Green concluded: “This is the first real test of his premiership, and markets are watching it more closely than almost anything else he will do in his opening 100 days.
“Get it right, and Burnham buys himself time and credibility with investors who are still willing to give him a chance. Get it wrong, and he risks his own mini-budget moment before he has even delivered his first speech from Downing Street.”
Related
deVere warns investors over potential shift towards wealth taxation under Burnham
deVere warns Healey appointment removes Treasury restraint markets expected
John Healey appointed chancellor in surprise Burnham cabinet move
Sterling rally is a warning to Burnham, deVere says
Angela Rayner returns to housing brief in Burnham cabinet
FLA urges Healey to reform consumer credit rules to unlock investment
Propertymark calls for housing tax review under Healey
Global economy faces risk of 1970s-style stagflation, warns deVere CEO
UK recession risks mounting as Spring Statement delivers ‘austerity-lite’, warns deVere CEO
Burnham scraps VAT on electricity bills in first major cost of living move
Burnham pledges “circuit breaker for Britain” as cabinet reshuffle takes shape