Andy Burnham becomes UK PM, tasks Healey with defence hike

Andy Burnham has entered 10 Downing Street as the new UK prime minister, promising a "10-year plan" focused on re-industrialisation, devolution and economic growth. Keir Starmer left the office with a "smile" and offered his "full support" to his successor.

The most consequential appointment for markets and European security is John Healey as chancellor. Healey resigned as defence secretary just last month, arguing that Starmer's investment plans put UK security at risk. He now faces the immediate challenge of raising military spending to 3% of GDP by 2030, a target that will require significant fiscal manoeuvring.

During his previous tenure at the Ministry of Defence, Healey pushed for "defence bonds" to fund the military build-up. The idea was dismissed by the former Treasury leadership as extra borrowing. His presence at the finance ministry now raises the prospect that such dedicated bond issuances could become central to the UK's defence funding strategy.

European alignment

Burnham moved quickly to signal his foreign policy intentions, holding an early call with French President Emmanuel Macron. The two leaders agreed to continue co-chairing the Coalition of the Willing to support Ukraine, while also aligning on efforts to de-escalate Middle East tensions and reopen the Strait of Hormuz. They discussed continued cooperation on energy and defence.

The rest of the cabinet blends continuity with targeted reshuffles. Ed Miliband moves to foreign secretary, while Wes Streeting shifts from health to defence. Yvette Cooper takes over the health brief, and Angela Rayner returns as housing secretary after stepping down last year.

Domestic pressure groups are already demanding results. Charity Shelter said the prime minister had given Rayner a “clear mandate to roll out a council housing revolution", while victim support groups highlighted the formidable challenges facing the new justice secretary, Alex Norris.

Burnham's team indicated the prime minister wants experienced figures to deliver his economic vision. Rayner summarised the administration's domestic goals, stating that Burnham’s vision of “good growth in every postcode demands we build on the foundations we have already laid to bring the change we have promised.”