Andy Burnham’s first cabinet appointments as prime minister have been described as “surprising” but also “logical” by the industry as experts assess what they could mean for spending and taxation.
Michael Field, chief equity strategist at Morningstar, said: “On the face of it, some of Andy Burnham’s cabinet appointments appear surprising, but a closer look at their backgrounds, policy positions and experience suggests a clear logic behind the choices.”
He said Healey was “one such surprise”, but added that his background helped explain the decision.
“First, he was a big advocate for defence spending, a stance that aligns very much with Labour’s commitments to raising defence spending in line with Nato requirements,” he said. “Secondly, his strong ties with Europe could prove useful as the UK is expected to move closer to the region in the coming years.”
Richard Carter, head of fixed interest research at Quilter Cheviot, described Healey as “arguably a safe pair of hands” for chancellor.
“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,” he said.
Carter added that Healey’s Treasury background “should keep bond markets calm for now”, although the relationship between Burnham and his chancellor would be closely watched.
“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,” he said.
“Keeping up appearances between the two will be crucial if Labour is to stand any chance of recovering in the polls.”
Lizzy Galbraith, senior political economist at Aberdeen Investments, said Healey’s appointment had “not increased market concern about the fiscal outlook”, but she warned that the government’s broader spending plans would increase pressure ahead of the autumn Budget.
“Burnham has indicated cost of living will be his principal focus, but the scope of his early commitments and ambitions is broad and covers some of the most significant areas of government expenditure,” she said.
“Efforts to maximise capital spending under the current fiscal rules are highly likely, but tax rises at the autumn Budget seem inevitable.”
