Healey named UK chancellor, faces defence spending and growth mandate
Andy Burnham has appointed John Healey as chancellor, tasking the former defence secretary with balancing fiscal responsibility against an ambitious re-industrialisation agenda and the costly target of raising military spending to 3% of GDP by 2030.
Andy Burnham has named John Healey as chancellor, pairing him with Emma Reynolds as chief secretary to the Treasury as the new prime minister finalises his cabinet. Healey’s appointment comes just a month after he resigned as defence secretary, accusing former prime minister Keir Starmer and former chancellor Rachel Reeves of putting UK security at risk by underfunding the military.
The new chancellor’s brief is to deliver an economic vision combining fiscal responsibility with re-industrialisation, devolution and measures to address the cost of living. However, his most immediate financial challenge will be finding the revenue to raise military spending to 3% of GDP by 2030.
While at the Ministry of Defence, Healey argued for the issuance of defence bonds to fund military investment, a proposal previously dismissed by the Treasury as merely extra borrowing. His elevation to chancellor raises the distinct prospect that gilt markets could soon see a new dedicated instrument designed to shoulder the heavy costs of the UK's defence ramp-up.
Miatta Fahnbulleh takes over as energy secretary, replacing Ed Miliband who becomes foreign secretary. The energy portfolio remains critical for markets, bridging the gap between net-zero commitments, industrial policy and household bills. Angela Rayner returns as housing secretary, a post central to Burnham’s infrastructure and growth strategy. "Andy Burnham’s vision of good growth in every postcode demands we build on the foundations we have already laid to bring the change we have promised," Rayner said.
On the international stage, Burnham moved quickly to speak with French president Emmanuel Macron, underscoring a focus on cross-Channel economic and security ties. Crucially for energy markets, the two leaders agreed on the need to de-escalate tensions in the Middle East and reopen the Strait of Hormuz. They also pledged continued cooperation on energy and defence, and agreed to co-chair the Coalition of the Willing supporting Ukraine.
The wider economic and domestic cabinet retains significant continuity. Shabana Mahmood stays as home secretary and Pat McFadden remains at work and pensions. Louise Haigh becomes first secretary of state and chancellor of the Duchy of Lancaster, while Yvette Cooper moves to health and Wes Streeting takes over the defence brief.
