Analysis-New UK finance minister calms market but investors see more tax and debt ahead

Andy Burnham’s decision to appoint John Healey as the UK’s finance minister is calming parts of the government bond market, but investors are still weighing the prospect of higher taxes and spending. Healey—widely viewed as a “safe pair of hands”—was previously defence minister under Keir Starmer’s government before quitting over criticism of under-spending on armed forces. Markets had reacted after Burnham discussed using flexibility within inherited fiscal rules, pushing borrowing costs up on Monday before stabilising on Tuesday after Healey’s appointment. Analysts are now estimating potential costs from defence plans, including a target of defence spending rising to 3% of GDP by 2030 versus about 2.7% under Starmer, which could add roughly £10 billion a year. Burnham has also suggested raising the income-tax threshold and keeping the “triple lock” for pensions. Investors will watch whether Healey moderates Burnham’s high-spend messaging.