![\"UK](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/07\/afp_20260724_c3432ru_v1_midres_britainpolitics.jpg\" "\\"British")
British PM Andy Burnham holds a meeting alongside Britain’s chancellor of the exchequer John Healey (R). (AFP) <\/p>\n\n UK chancellor faces rocky path to economic renewal\n <\/p>\n
British PM Andy Burnham holds a meeting alongside Britain’s chancellor of the exchequer John Healey (R). (AFP) <\/p>\n
\n\tThe UK\u2019s new Prime Minister, Andy Burnham, is already sending shockwaves through Westminster. Defying almost every political forecast and market expectation, he has named John Healey, a former defense secretary, as the new chancellor of the exchequer.<\/p>\n
\n\tHealey steps into this role \u2014 one of the most powerful in the UK government \u2014 at a challenging moment for the British economy. Growth has been too low for too long; fiscal flexibility is limited; borrowing costs are the most burdensome among the G7 economies; and taxes are already high, though public services often disappoint. External pressures compound the challenge, and the economy\u2019s resilience has already been eroded by the global pandemic and two energy shocks.<\/p>\n
\n\tBut the British economy\u2019s potential remains considerable. Realizing that potential will not be easy, but it is doable, as long as Healey draws the right lessons from his predecessor\u2019s experience \u2014 the good, the bad, and the ugly \u2014 and tackles the early challenges he faces effectively. Much will depend on how Healey leverages three features of his background.<\/p>\n
<\/p>\n
\n\t\tHealey steps into this role at a challenging moment<\/p>\n
\n
<\/p>\n
\n\t\tMohamed A. El-Erian<\/p>\n
<\/p>\n
\n\tThe first feature is the most immediate: the shock of his selection. As late as the morning of the announcement, prediction markets put the chances that Home Secretary Shabana Mahmood would be selected for the role at around 90 percent. Burnham\u2019s pivot to Healey points to a deliberate, tightly held strategy, which depends on the installation of a specific type of operator in the Treasury. The question now is how the government will build on this surprise move.<\/p>\n
\n\tSecond, unlike Mahmood, Healey has experienced the Treasury from the inside, having served as a junior minister in the New Labour era under Prime Minister Tony Blair. Healey will not need a manual to lead him to the department\u2019s levers of power; he already understands its complex machinery. This institutional memory should enable him to move quickly in shaping a much-needed revitalization of the UK\u2019s \u201cgrowth mission.\u201d<\/p>\n
\n\tThird, Healey has fiercely advocated for higher defense spending \u2014 to the point that he resigned as defense secretary last month over the previous government\u2019s unwillingness to increase funding for the military. His resignation letter lambasted his and Burnham\u2019s predecessors \u2014 Rachel Reeves and Keir Starmer, respectively \u2014 for failing to \u201ccommit the resources that the nation needs to defend the country at this time of rising threats.\u201d<\/p>\n
\n\tThe Treasury is traditionally the department that refuses expensive requests. Giving a vocal defense hawk control over it is a bold \u2014 and risky \u2014 move. The extent to which it pays off will depend significantly on how Healey accommodates his desire for higher military spending. Can he find the funds to fill funding gaps without hiking taxes to politically toxic levels or slashing other essential services? His openness to innovative financing approaches \u2014 such as \u201cwar bonds\u201d coordinated with European allies and other multilateral defense funding mechanisms \u2014 could make a difference, though these would come with their own challenges.<\/p>\n
<\/p>\n
\n\t\tBurnham has taken a smart, calculated risk<\/p>\n
\n
<\/p>\n
\n\t\tMohamed A. El-Erian<\/p>\n
<\/p>\n
\n\tThis is just one part of a broader fiscal balancing act. Burnham, who has worried that the previous administration may have locked the Treasury into too tight a fiscal framework, has already said that he will use \u201cflexibility\u201d within the fiscal rules to increase investments. It is now up to Healey to find this fiscal room to maneuver, especially to fund pro-growth infrastructure, without upsetting the bond vigilantes. It might be a good sign that the bond market has not pushed back against the new government\u2019s first fiscal measure \u2014 cutting value-added tax on electricity \u2014 but the situation remains fluid.<\/p>\n
\n\tUltimately, Healey is responsible for ensuring that economic growth \u2014 essential to long-term prosperity and fiscal sustainability \u2014 is not sidelined again by too narrow a focus on budget arithmetic. As he has recognized, \u201cTreasury orthodoxy\u201d has often kept the institution so obsessed with balancing the books that it has lost sight of broader policy strategy. To succeed, Healey will have to coordinate closely with Burnham\u2019s office on a comprehensive policy approach that delivers sustained inclusive prosperity through higher productivity, scaling up of home-grown innovations, regionalizing growth engines, and reinvigorating trade links, starting with Europe.<\/p>\n
\n\tBy appointing Healey, Burnham has taken a smart, calculated risk. If Healey can leverage his insider knowledge of the Treasury, pursue a bold, pro-growth agenda, and responsibly manage his own defense-spending instincts, he may well be able to deliver the structural shake-up the British economy desperately needs. But if he falls victim to the Treasury orthodoxy he has criticized, or if his commitment to raising defense spending spooks the bond market, he could quickly become a headache for the new government, especially given today\u2019s fluid, uncertain, and shock-prone global economy.<\/p>\n
\n\tExpectations are high for Burnham\u2019s new government. Whether they can be met will depend significantly on whether Healey\u2019s unexpected appointment as chancellor translates into the strategic agility the UK needs to navigate a narrow and rocky path to economic renewal.<\/p>\n
\n\t\u2022 Mohamed A. El-Erian, a former president of Queens\u2019 College at the University of Cambridge, is Practice Professor at the Wharton School at the University of Pennsylvania, where he is also Senior Global Fellow at the Lauder Institute.<\/p>\n
\n\t\u00a9Project Syndicate<\/p>\n
Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News’ point of view<\/p>\n","protected":false},"excerpt":{"rendered":"UK chancellor faces rocky path to economic renewal British PM Andy Burnham holds a meeting alongside Britain’s chancellor…\n","protected":false},"author":2,"featured_media":709557,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-709556","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/709556","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=709556"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/709556\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/709557"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=709556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=709556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=709556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}