Markets React More Negatively to Ed Miliband as Chancellor Than Wes Streeting, Says Investment Bank Executive

Julian Morse, co-chief executive of London-listed investment bank Cavendish, has stated that financial markets would “take [Ed Miliband] in a worse way” than Wes Streeting if either were appointed as UK Chancellor, according to a report in City AM. The comment comes as speculation grows over potential successors to Rachel Reeves, who is expected to step down following Andy Burnham’s anticipated leadership victory.

Miliband’s Net Zero Stance and Market Concerns

Miliband, currently the UK’s energy secretary, has drawn criticism from industry leaders for his aggressive net zero policies. His tenure has seen delays in approving new energy projects, including those by Shell and Equinor, and resistance to expanding North Sea drilling licenses. Julian Morse highlighted that Miliband’s approach “costs money, costing us tax receipts which we could be spending on renewables.”

The Zero Emission Vehicle (ZEV) mandate, which requires 80% of new car sales to be electric by 2030, has faced industry backlash. While the government is considering easing the target to 50%, Miliband has consistently supported the stricter requirement, arguing it aligns with the UK’s climate goals.

Streeting’s Market-Friendly Approach

In contrast, Morse suggested that markets would respond more favorably to Wes Streeting, the former health secretary. Streeting has advocated for policies that balance economic growth with environmental goals, including fast-tracking infrastructure projects and allowing North Sea oil and gas developments. He has also criticized Miliband’s 2030 net-zero target as “a short-term arbitrary target.”

Streeting’s economic blueprint includes equalizing capital gains taxes with income taxes and offering incentives for startups. These proposals align with the 2023 Labour Growth Group report, which emphasized fiscal responsibility and innovation-driven growth.

Burnham’s Economic Strategy and Market Reassurances

Andy Burnham, the frontrunner to succeed Keir Starmer as Labour leader, is expected to adopt a more left-leaning economic agenda. However, he has sought advice from economists like former Bank of England official Andy Haldane and ex-OBR chief Richard Hughes. Morse noted that Burnham’s team appears to be “taking advice from people who know what they are talking about,” signaling a shift toward market-sensitive policymaking.

Burnham is set to deliver an economic speech next week, where he is expected to reaffirm Rachel Reeves’ fiscal rules. Morse added that leaders are increasingly aware of the need to “not ignore the bond markets” and that high interest rates have made debt servicing a critical concern.

Why This Matters: Historical Precedents and Market Dynamics

The debate over Miliband vs. Streeting reflects broader tensions between climate urgency and economic pragmatism. Historically, market reactions to policy shifts have been volatile—similar to the 2010 austerity measures, which saw immediate sell-offs in government bonds. However, Burnham’s reliance on experienced economists suggests a more measured approach, akin to the 2021 fiscal strategy under Rishi Sunak, which balanced deficit reduction with growth incentives.

Investors are closely watching how Labour reconciles its climate commitments with fiscal discipline. A misstep could trigger capital outflows, as seen during the 2022 mini-budget crisis, when the pound fell to a 37-year low against the dollar.