“He’d need a massive hearts and minds campaign to begin with and probably a commitment in principle to carry on with (the perceived) good work this [Treasury] is doing,” said one financial services executive, granted anonymity to speak freely.
Rachel Vahey, head of public policy at AJ Bell, added that Miliband was viewed by markets as “likely to eschew the current fiscal discipline, to borrow more to deliver quicker change,” which has sent the cost of U.K. government borrowing spiralling upwards in recent months, reaching decade-long highs.
Other alternatives don’t seem much better for the financial sector. Hollands noted that Pensions Minister Torsten Bell could snap up the position if any new prime minister was interested in “signaling a generational shift,” but his bungled passing of the Pension Schemes Bill last month may hamper his chances.
No matter who takes the job, it’s unlikely any candidate will match the progress Rachel Reeves has made in tearing down red tape in the City. | Adam Vaughan/EPA
Meanwhile, welfare chief Pat McFadden had previously been widely seen by the financial sector as poised to succeed Reeves if she departed, being touted as the go-to figure for the City while Labour was in opposition.
He is viewed as the most likely (along with Starmer’s right-hand-man Darren Jones) to “deliver a continuation of the Rachel Reeves regime,” Vahey said. However, his ideological ties with Starmer have seen his chances of succeeding to the position drop rapidly.
The City is hoping that the current bond market spiral will push a left-wing prime minister to appoint a moderate option to chancellor, with eyes on a party grandee like current Foreign Secretary Yvette Cooper or someone from the right of the party, such as Home Secretary Shabana Mahmood.