Andy Burnham is likely to replace Rachel Reeves as chancellor if he becomes prime minister, the BBC understands, marking a potential shift in the UK's economic leadership that could influence trade policy.
Leadership Transition
According to the BBC, Burnham, the former Greater Manchester mayor, is expected to offer Reeves a more junior cabinet position rather than retain her as chancellor. A spokesperson for Burnham said no decisions had been made. Burnham became the sole candidate for the Labour leadership after winning the Makerfield by-election, prompting Sir Keir Starmer to announce he was stepping down as prime minister.
Most Labour MPs assume Reeves will not continue in that role, as first reported by the Financial Times. A close ally of Burnham told the BBC: "Andy really respects Rachel and I'm confident he'll want her in his top team."
Cabinet Formation
Burnham has begun assembling a Downing Street team. James Purnell, who served as a minister in Gordon Brown's government between 2007 and 2009, would be appointed as his chief of staff. The biggest decision Burnham will make is who will be chancellor. Darren Jones, a cabinet minister and close ally of Sir Keir, confirmed he would not run for leader, saying: "Andy Burnham is going to be the next prime minister and if there was a contest of Labour Party members, he would win." Jones added that he had received assurances on Burnham's approach to economic policy.
Former Royal Marines officer Al Carns is still considering standing, but told BBC Newsnight he was waiting to see what policies Burnham planned to "push forward". To get on the ballot paper, candidates need nominations from 81 Labour MPs, plus either 32 local branches or three affiliated organisations including two trade unions.
Defence Spending Challenge
If Burnham becomes prime minister, an immediate challenge will be how much to spend on defence. Burnham and his team have discussed this with John Healey, the former defence secretary who resigned earlier this month, warning the current planned increase fell "well short of what is required".
Sir Keir met Burnham for an hour on Tuesday, the first since the by-election, to ensure an "orderly" transition. Burnham could become prime minister as early as 17 July if no challenger emerges.
Implications for Trade Professionals
The change in economic leadership from Reeves to a new chancellor could signal a shift in fiscal policy that indirectly affects UK trade. Reeves' successor may adopt different approaches to taxation, public spending, and international economic partnerships. While no specific trade policy changes have been announced, the new administration's priorities – including the defence spending debate – may influence the UK's stance on trade agreements, customs arrangements, and regulatory alignment. Importers, exporters, and trade analysts should monitor cabinet formation and the new chancellor's first statements for clues on trade-related fiscal measures.
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