20 July 2026
If you are covering the appointment of John Healey as Chancellor of the Exchequer, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Following his coronation as Labour leader, and now in the hot seat as Prime Minister, Andy Burnham has opted for what is arguably a safe pair of hands for Chancellor in John Healey. Shabana Mahmood was deemed the favourite, but Healey brings Treasury experience and is a sign that Burnham will respect the bond markets as a check on his radicalism, rather than plough ahead with significant changes that could unsettle the fiscal position. This is important after his comments on the flexibility available within the fiscal rules.
“Burnham has made it clear he will take an interest in Treasury matters so will want to be able to steer the direction of economic policy and see less resistance for what could still end up being a fairly radical agenda. Indeed, Burnham will need a pliant chancellor if he is to drive through the change that voters are desperate for, yet whether that is Healey remains to be seen, especially given his departure from Starmer’s government. Healey’s previous Treasury experience should keep bond markets calm for now, while the spectre of Liz Truss and the lettuce continue to play in the minds of politicians terrified of a repeat. Keeping up appearances between the two will be crucial if Labour is to stand any chance of recovering in the polls.
“What Burnham and Healey need to continue focus on is growth. Burnham has said he wants ‘good growth’ in all areas of the country, although at this stage the nation is crying out for any kind of sustained economic growth. Healey has been supportive of additional borrowing ringfenced for defence spending, but data out later this week will likely paint a difficult picture of the challenges facing this new government. Borrowing and spending has soared, employment remains weak and inflation sits above target – the Office for National Statistics will confirm all three remain the case later this week.
“Without a change to the fiscal rules, which in itself would be a difficult sell to markets, the options are limited for Burnham and Healey. Spending cuts are unlikely to feature in a Burnham premiership, which means tax rises will be back on the table when the Budget comes along in the autumn. We have seen the damage such speculation and policy can have on business confidence and thus the UK economy, so that period will need to be carefully managed. Burnham is in his honeymoon period for now, but by the Autumn he may just find the problems that brought down Keir Starmer have failed to disappear.”
