New Chancellor John Healey has been urged to focus on economic growth by financial experts.
Prime Minister Andy Burnham has said he wants “good growth” in all areas of the country and Mr Healey has been urged to support that aim.
Anna Macdonald, investment strategy director, Hargreaves Lansdown, said: “The priority should be a credible, investment-friendly plan for economic growth, alongside clarity and stability on tax.”
She called for an end to constant speculation, including on capital gains tax, which, “risks making people more cautious about moving their money from cash into long-term investments, at precisely the moment when Britain needs more people to invest for their future.”
Richard Carter, head of fixed interest research at Quilter Cheviot, said: “What Burnham and Healey need to continue focus on is growth.”
He said Mr Healey has been supportive of additional borrowing ringfenced for defence spending, but data out later this week will likely paint a difficult picture of the challenges facing this new government. Borrowing and spending has soared, employment remains weak and inflation sits above target.
Mr Carter added: “Without a change to the fiscal rules, which in itself would be a difficult sell to markets, the options are limited for Burnham and Healey. Spending cuts are unlikely to feature in a Burnham premiership, which means tax rises will be back on the table when the Budget comes along in the autumn.”
Harry Woolman, global capital markets analyst at Validus Risk Management, said: “Healey is widely regarded as a safe pair of hands who is likely to deliver on Burnham’s agenda rather than pursue an agenda of his own. He has also previously served in a junior role at the Treasury.”
He said attention therefore turns to the new Prime Minister’s speech today, in which he is expected to announce policy measures aimed at easing the cost-of-living burden and set out how these will be funded. “This will no doubt be high on the new Chancellor’s agenda for the foreseeable future.”
Nigel Green, CEO of deVere Group, said: “Healey resigned from Cabinet last month demanding more money for defence and has pushed for spending to reach 3% of GDP by 2030. He now runs a Treasury under a Prime Minister who has ruled out raising income tax, VAT and National Insurance.
“That spending has to be funded somewhere, and wealth, capital gains and property are the obvious remaining options.”