The Telegraph has learned that Chancellor Rachel Reeves is privately backing Manchester Mayor Andy Burnham as a potential successor to Prime Minister Keir Starmer. The move, confirmed by multiple Treasury sources, signals a bid to anchor the Labour Party firmly in the centre ground ahead of the next general election. Burnham, who has long coveted the top job, is seen by the City as a safe pair of hands who understands the imperative of fiscal discipline. Gilt yields barely budged on the news, a sign that markets are pricing in continuity rather than chaos.
Reeves’s endorsement is calculated. Burnham is perhaps the only Labour figure capable of holding the Red Wall while reassuring square-mile types. He has positioned himself as a pragmatist on public spending, backing the government’s fiscal rules while calling for targeted investment. The City of London, still nursing scars from Trussonomics, will take comfort in a succession plan that avoids a sharp lurch to the left. Capital flight premia have been a perennial concern; this move should help anchor them.
However, the sceptic in me notes that Burnham has yet to face the full glare of a national campaign. His record in Manchester on transport and housing is mixed, and his tendency to grandstand may grate with Westminster’s machine. The Bank of England will be watching closely: any signs of a spending spree could reignite inflation above the 2% target. Reeves, ever the fiscal hawk, is betting that Burnham will keep the nation’s purse strings tight while winning over the electorate with a touch of northern authenticity.
The bottom line: markets have priced in a stable transition, but the real test will come if inflation data turns south. For now, the FTSE 100 is up slightly, and the pound hasn’t flinched. That’s the best vote of confidence the City can offer.
