Andy Burnham, in his first acts as Prime Minister, has appointed John Healey as Chancellor of the Exchequer while pledging to use "any flexibility" within existing fiscal rules, a comment that sent UK government borrowing costs sharply higher. The yield on ten-year gilts rose above 5.04 per cent, a level breached only recently for the first time since 2008 and higher than under Liz Truss, as investors reacted nervously to signals of looser fiscal discipline. Since higher gilt yields typically feed through into mortgage and business borrowing costs, the move raises concerns about pressure on household finances and corporate profits just as the new government sets out its economic direction.

The rise was reportedly the fastest among G7 nations, with commentators including former Osborne adviser Rupert Harrison and economist Mohamed El-Erian flagging it as an early warning sign for the Burnham government. Britain already borrows more expensively than any other G7 country. Healey, who resigned from Sir Keir Starmer's government last month over defence spending, replaces Rachel Reeves, who was sacked after also presiding over rising borrowing costs, and will now face the task of addressing a defence budget shortfall ahead of a Budget expected this autumn.