Disaster for Burnham as decision to sack Reeves backfires | Politics | News
Share prices fell as Andy Burnham launched a major Cabinet reshuffle today in a blow to the new Prime Minister. Mr Burnham sacked Rachel Reeves as Chancellor shortly after she entered Number 10 alongside Labor luminaries such as David Lammy, Steve Reed and Lord Hermer.
In a surprise move, he immediately appointed John Healey to replace Ms Reeves after speculation that Shabana Mahmood and Ed Miliband were frontrunners for the role. However, the chaos spooked markets and the FTSE 100 fell 0.71% to finish at 10,524.76 points.
Investors have also been left uncertain about exactly what Mr Burnham’s economic policy will look like, despite claims that the new spending plans will be fully funded and “adhere to fiscal rules”.
But he added that he would use “any flexibility” he could find within existing rules, and financial markets subsequently suffered a downturn.
The yield on 10-year Government bonds, called gilts, rose eight basis points to 5.049% at the end of London trading, pushing the cost of UK government borrowing to the highest level in nearly two months.
The pound sterling also fell 0.29% to 1.341 against the US dollar, having previously been positive in most of the day’s trading.
It comes after Mr Burnham promised in his first speech as Prime Minister to usher in a period of “reflection and new solutions”. “Britain needs to show the world that we can regain our stability once again,” he said.
He continued: “I know people at home are fed up with politics. I hear you and I want to be honest with you; we haven’t been good enough and we need to be better. We will be.”
“We will make this moment a circuit breaker for Britain and bring forward the biggest changes in the last 40 years: a new political model and a new economic model.”
Mr Burnham suggested this would involve “bringing the basics of life under public control to make them affordable” and using public spending to support British businesses.
He said he would prepare a 10-year plan towards the end of this year and provide more immediate support to households struggling with rising costs.
