The chief executive of a London-listed investment bank has warned that financial markets would react worse to Ed Miliband as Chancellor than to Wes Streeting.
Julian Morse, co-chief executive of Cavendish, made the comments as speculation intensifies over who will take over at the Treasury following Keir Starmer’s resignation.
Andy Burnham’s widely expected coronation as Labour leader has prompted investors to focus sharply on who will become his neighbour at 11 Downing Street.
Allies of Burnham have said that Rachel Reeves will be shown the door, with energy secretary Miliband and former health secretary Streeting cited as frontrunners to replace her.
“I think if the Chancellor is Miliband, I think the markets will take that in a worse way than if it’s Streeting,” Morse told City AM.
Morse added that Miliband “absolutely thinks we should be spending as much as we can on the welfare state” and accused him of blocking natural energy development as energy minister.
Miliband’s tenure in Starmer’s cabinet has already triggered significant backlash from industry and the City, with the former Labour leader pushing the UK aggressively toward net zero targets.
He has stalled on new exploration projects from Shell and Equinor, refused to ease North Sea drilling licences, and backed the electric vehicle mandate requiring a majority of new car sales to be all-electric by 2030.
While Morse acknowledged Miliband’s net zero ambitions were “for good reason,” he argued the UK is pursuing its climate agenda far more aggressively than major polluters like the US and China.
“We’re at a massive disadvantage, which is costing money, costing us tax receipts which we could be spending on renewables,” Morse said.
Morse described Miliband as “a smart chap” but said “he’s got the wrong angles that he’s going after” and warned markets “would come off a bit if he became Chancellor.”
In contrast, Morse suggested markets could “actually strengthen a bit” if Streeting were appointed, painting a notably more optimistic picture for the City under his stewardship.
Streeting has already signalled his economic direction, endorsing a growth report by Mark McVitie for the Labour Growth Group that calls for capital gains taxes to be equalised with income taxes alongside an “investment allowance” for start-ups.
He has also pledged to use emergency laws to fast-track construction of data centres and critical infrastructure, and promised to allow North Sea oil and gas projects to proceed, criticising the current pace of infrastructure investment as “glacial.”
During a speech last Tuesday, Streeting took a direct swipe at Miliband’s 2030 net-zero greenhouse gas emissions deadline, calling it a “short-term arbitrary target.”
He said: “We can’t play fast and loose with public finances. Not when the risks are so high and faith in politics is so low.”
Burnham, the former Manchester Mayor, has previously attracted concern among economists for his past comments on bond markets, tax cuts, and nationalisation.
However, he has recently sought advice from economic heavyweights including former Bank of England economist Andy Haldane and sacked OBR chief Richard Hughes in a bid to reassure markets.
Burnham is also set to deliver a speech on the economy next week, reiterating his commitment to Rachel Reeves’ fiscal rules, according to the Times.
“Burnham has traditionally been a tax and spender,” Morse said, but added it “sounds like he’s taking advice from people who know what they are talking about,” hailing the move as “really encouraging.”