The Rt Hon John Healey has been confirmed as Chancellor of the Exchequer in Prime Minister Andy Burnham's first major appointment, ending weeks of speculation and drawing swift reaction from business and rural groups over the direction of the new government's economic policy.

Andrew Prosser, Head of Investments at InvestEngine, said the appointment closed off a period of uncertainty that had itself posed risks to market confidence. "There has been much speculation over recent weeks over who will become Andy Burnham's Chancellor, with today's appointment of John Healey finally putting those rumours to rest," he said.

Prosser warned that the new Chancellor inherits a difficult fiscal picture, with public-sector debt standing at around 95% of GDP and borrowing already running above official forecasts. A rise in gilt yields, he cautioned, would push up the cost of servicing the national debt and could feed through into higher mortgage and business borrowing costs.

"In the immediate days of this new government, the Chancellor should be seeking to send a message of stability rather than upheaval and should avoid rushed or poorly signalled changes on spending or taxation," he said, adding that the role "must always be to project fiscal credibility."

He noted that pledges already on the table — energy cost support, a higher personal tax allowance and increased aid spending — carry significant costs at a time when fiscal headroom is limited, leaving Healey with "difficult decisions before he's even set foot in the Treasury."

Business calls for continuity

CBI Chief Economist Louise Hellem congratulated Healey on the appointment but stressed that the underlying challenges facing business remain unchanged. "Business will be conscious that whilst there is now a new occupant at No. 11 Downing Street, the same challenges to unlock growth remain," she said, calling for continued commitment to established fiscal rules, protection of capital investment, progress on the EU-UK reset and the retention of a single fiscal event each year.

Hellem urged the government to move quickly on Industrial and Infrastructure Strategy commitments and the Mansion House reforms, and said high energy and employment costs remained a brake on growth. She called for a review of the tax and regulatory system, arguing the test for every economic decision ahead should be whether it makes it easier for businesses to invest, hire, innovate and grow.

Rural anger over inheritance tax

The Country Land and Business Association struck a more critical note. CLA President Gavin Lane said the departure of Rachel Reeves had not resolved the anxiety created by her inheritance tax policy for farming families. "Families who have spent decades building farms and businesses are now being forced to discuss what land might have to be sold, what part of the enterprise might have to go, and whether there will be enough left to pass on," he said.

Lane argued that a partial reversal had changed the calculations for some but not eased the wider anxiety, and called on Burnham and Healey to act. "They cannot rebuild trust from the distance of a Treasury spreadsheet," he said, urging ministers to listen to those already bearing the cost of the policy.

He pointed to government figures showing £22.5 billion of rural economic growth going unrealised, arguing that a full reversal of the inheritance tax changes, alongside proper backing for rural businesses, would restore the confidence needed to grow and pass on viable enterprises. "The countryside has never been short of ambition," he said, "only of governments prepared to match it."

Further Cabinet appointments

The King has also approved a series of further ministerial appointments. Rt Hon Ed Miliband MP becomes Secretary of State for Foreign, Commonwealth and Development Affairs, while Rt Hon Louise Haigh MP takes on the roles of First Secretary of State, Chancellor of the Duchy of Lancaster, and Minister for the Cabinet Office. Rt Hon Shabana Mahmood MP remains as Secretary of State for the Home Department.Rt Hon Yvette Cooper MP as Secretary of State for Health and Social Care and Rt Hon Pat McFadden MP will remain as Secretary of State for Work and Pensions.