The political landscape in Westminster is undergoing significant upheaval following Prime Minister Keir Starmer's resignation on 22 June, casting considerable doubt over the future of Chancellor Rachel Reeves. While a new Labour leader is yet to be formally elected, with Andy Burnham appearing the most likely successor, the conventional wisdom suggests that a change at the top of government typically results in a new appointment to Number 11 Downing Street.
Reeves' close association with Starmer's economic agenda makes her retention in the role seem improbable. Matthew Ryan, head of market strategy at financial services firm Ebury, noted that attention has already shifted to the identity of the next Chancellor of the Exchequer. Historically, Chancellors rarely survive a change of Prime Minister. Jeremy Hunt's brief survival during the transition from Liz Truss to Rishi Sunak in 2022 was an anomaly, occurring after Truss had already replaced her initial appointment, Kwasi Kwarteng. Prior to that, Reginald Maudling in 1963 was the last Chancellor to remain in post after a Prime Minister's departure.
Among the potential candidates to succeed Reeves, Wes Streeting has emerged as a prominent name. Despite initially being considered a contender for the top job himself, Streeting quickly announced he would not challenge Burnham for the leadership. Financial services experts view Streeting as a potentially positive outcome for the pound, given his perceived centre-left pragmatism and a disinclination towards aggressive tax-and-spend policies. Susannah Streeter, chief investment strategist, suggested Streeting would likely aim to project reassurance and a 'business as usual' attitude to calm investors and manage government borrowing costs.
Another high-profile individual being discussed for the Chancellor role is Ed Miliband, currently the Secretary of State for Energy Security and Net Zero. While Miliband's 'soft left' stance might raise concerns about increased spending, his extensive experience in senior roles, including as a special adviser to Gordon Brown, is seen as a stabilising factor. Sarah Coles, head of personal finance at AJ Bell, indicated that Miliband was instrumental in persuading Burnham to adhere to fiscal rules to reassure markets. Coles also suggested Miliband might consider progressive taxes or reviewing tax cuts benefiting higher earners to balance the books, potentially including a 'mansion tax' or environmental levies. However, his strong association with net zero policies could face opposition from some business and trade union circles.
Shabana Mahmood, the current Home Secretary, is also mentioned as a possible contender, though her specific economic agenda as Chancellor remains less clear. Having not publicly addressed economic issues since her time in the shadow Treasury, any assessment of her approach would require extrapolation from her broader political positions. The ultimate decision on the next Chancellor will rest with the new Labour leader, whose choice will be keenly scrutinised by both financial markets and the public.