UK's Burnham takes power as markets eye chancellor pick

Andy Burnham will arrive in Downing Street on Monday morning after Keir Starmer formally resigns at Buckingham Palace. The Makerfield MP faces an immediate test in assembling his first cabinet, a process that will signal the economic direction of the new government to European investors and financial markets.

The most critical appointment is the chancellor of the exchequer. Retaining the incumbent, Rachel Reeves, is considered unlikely, as keeping her would suggest nothing had changed with Starmer's departure. His decision here will dictate whether his government is viewed as a continuation of the previous administration or a distinct economic shift.

To steady the bond markets, Burnham could turn to an experienced figure like Yvette Cooper. Such a choice would prioritise financial stability. However, it might clash with the radical domestic agenda Burnham has outlined, which includes public control of utilities and extensive devolution. If he chooses to pursue these policies, Burnham may decide he needs a chancellor fully aligned with his political direction.

Shabana Mahmood, the outgoing home secretary, is the current favourite for the Treasury. Her effective, if controversial, tenure has built a reputation as an independent-minded minister focused on delivery and voter priorities. Alternatively, Ed Miliband represents the ideological core of Burnham's project. As a key architect of Burnham's return to parliament, Miliband has relevant Treasury experience, though his appointment carries a distinct risk of unnerving investors.

Beyond the Treasury, Burnham must delegate foreign affairs to concentrate on his domestic agenda. He is reportedly considering appointing David Miliband as a peer to serve as foreign secretary, though this risks criticism for relying on unelected figures from the New Labour era. If Burnham instead seeks party unity, the foreign secretary role could go to Reeves to keep her in the cabinet.

Other key allies who engineered his ascent, including Lisa Nandy, Angela Rayner and Pat McFadden, will expect senior roles. Wes Streeting is likely to be moved to either health or home secretary, where he would shift focus toward tackling crime and pursuing a softer migration policy. Ultimately, the final cabinet makeup will reveal whether Burnham prioritises market reassurance or radical economic reform.