Andy Burnham has become the UK's seventh prime minister of the past decade today, taking over from Keir Starmer in what is hoped will be a period of stability in UK politics.
Markets have taken the transition in their stride. At the time of writing, sterling is near a 13-month high against the euro and close to $1.35 against the dollar, gilt yields are around 4.95%, having eased back from a two-month high, and the FTSE 100 is trading essentially flat just above 10,500.
The calm, however, doesn't necessarily mean there is confidence in what comes next. Burnham inherits manifesto pledges such as protecting income tax, VAT and National Insurance, which leaves wealth, capital gains and departing assets as the principal levers available to an as-yet-to-be-named chancellor looking to raise revenue.
What exactly the next chancellor does with those levers – and how far Burnham's own instincts on taxing wealth and capital will shape the autumn Budget – remains to be seen.
There are a few points which seem firmer than others: maintaining Rachel Reeves’ fiscal rules and Labour pledges on income tax, National Insurance and VAT.
According to Sarah Coles, head of personal finance at AJ Bell, Burnham has “repeatedly demonstrated an enthusiasm for supporting the underdog and revisiting wealth taxes and taxes on higher earners to help pay for it." Below, she picks through the signals, trying to identify what a Burnham leadership means for investors.
Pensions and ISAs
The most immediate question for investors and savers is whether the next chancellor will revisit two of Reeves' most contested decisions: the inclusion of pension pots in inheritance tax from 6 April 2027 and the planned cut to the cash ISA allowance on the same date. Both have drawn "fierce criticism" and a new chancellor with a mandate to reconsider could shelve either or both.
Burnham has also said inheritance tax changes for farmers deserve a second look and that he wants to revisit the income tax personal allowance, currently frozen until April 2031, but stopped short of committing to raising it.
Tax
On one side, Burnham has spoken about cutting business rates for pubs by 20% and lifting the threshold for small businesses. On employers' National Insurance – a rise that has drawn significant pushback from business groups – Coles founds him “sympathetic to reversing it”.
On the other side, he has repeatedly signalled an appetite for taxing wealth and higher earners more heavily. He has described land as undertaxed, called for reform of council tax and stamp duty, and has previously floated reintroducing the 50p income tax rate – though he declined to say whether that remains on the table.
Before this campaign, his position on inheritance tax was scrapping it entirely and replacing it with a care levy to fund an integrated health and social care system. He confirmed during the campaign he would not rule out revisiting the idea.
Gilts, utilities and ‘public control’
Gilt yields had spiked to a two-month high earlier this month on speculation about a Burnham leadership bid, in part because of past comments in which he said he did not want to be answerable to the bond market. They have since eased back, partly on expectations that Shabana Mahmood will be named the next chancellor. "Whether the bond markets will take him at his word could well become clear" as his premiership gets underway, Coles said.
More specific concerns have emerged around his calls for stronger public control of key services. He has named energy, transport and water as areas where he wants to extend state involvement. That will matter to holders of shares in companies such as National Grid, Trainline and Severn Trent, said Coles.
He has stopped short of calling for nationalisation – the exception being Thames Water – but investors will be watching closely for any sharper definition of what “public control” means in practice.
On pensions specifically, Burnham's focus has been on low-income pensioners rather than savers. He reopened the debate around compensation for women born in the 1950s affected by state pension age changes, though his team later clarified he had not committed to full financial compensation.