Must read: defence stocks jump after Healey appointed Chancellor
ii’s head of investment rounds up the morning’s big news.
21st July 2026 08:51
by Victoria Scholar from interactive investor
As part of his new Cabinet, Prime Minister Andy Burnham unexpectedly announced former defence secretary John Healey as his Chancellor. Healey’s resignation last month was a pivotal moment for Andy Burnham entering Number 10 by paving the way for Keir Starmer’s departure from office.
- Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts
Healey’s surprise appointment has so far been well received by the markets with the pound paring some losses after the announcement, currently trading above $1.34. He is seen as an experienced political operator and a safe pair of hands with past experience in the Treasury under Gordon Brown.
The MP for Rawmarsh and Conisbrough is expected to be a fiscally prudent Chancellor, like his predecessor Rachel Reeves, but with a greater focus on devolution and defence spending. His appointment has sent defence stocks soaring with Babcock International Group (LSE:BAB) up 6%, hitting the top of the FTSE 100, and BAE Systems (LSE:BA.) also up over 3%.
However, Healey has a daunting task on his hands. The government has ambitious plans to tackle cost-of-living pressures, having already announced plans to cut VAT on household electricity bills in October. But he faces a very difficult set of public finances to carry these expensive plans through.
- Insider: boss buys Vistry plus £500k deal at UK tech stock
- 10 hottest ISA shares, funds and trusts
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
Amid the backdrop of the Iran war’s inflationary pressures and high levels of government debt, there’s little room for extra spending without raising taxes. And any signs he is veering away from Rachel Reeves’ strict fiscal rules could spook the bond market, with the 10-year yield already breaking above the psychological 5% level.
Burnham has expressed some interest in using some ‘flexibility’ in the fiscal rules, but the government must remain fiscally prudent, avoiding higher deficits and encouraging productive investment in order to keep the bond vigilantes at bay.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.