Mahmood’s Economic ‘Blank Slate’ Key to Appeal as UK Chancellor

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(Bloomberg) — UK Home Secretary Shabana Mahmood’s edge over Energy Secretary Ed Miliband in the race to be appointed Andy Burnham’s Chancellor of the Exchequer appears to lie in one important quality: economically, she’s a blank slate.

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Mahmood leapfrogged Miliband in the Westminster rumor mill on Wednesday with a flurry of stories in the UK press that she would be Burnham’s pick. Burnham’s team pushed back, telling Bloomberg he has not yet told his inner circle of any decision. Mahmood’s team said Thursday she hadn’t been informed of any planned appointment. 

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Burnham is due to become Labour leader on Friday and prime minister on Monday, with his cabinet appointments expected to be announced soon thereafter. 

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Little is known about Mahmood’s economics, leaving an open question about what the Treasury would look like under her leadership. Therein may lie the appeal. One person close to Burnham said her relative inexperience in the Treasury is an advantage. Burnham needs a chancellor who will deliver his policies and has no desire for his job, they said. 

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Moreover, she’s more likely to be seen favorably by financial markets that have often in recent years responded to political turmoil in the UK by forcing up borrowing costs. “Shabana Mahmood is indeed a blank slate when it comes to economic policy, whereas Ed Miliband is not,” said Chris Turner, Global Head of Markets at ING. “He is seen as more interventionist and higher-spending.” 

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Pound Hits One-Year High as Fiscal Fears Ease, Bears Retreat

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The pound and gilts consolidated earlier gains as reports emerged Wednesday that Burnham had settled on Mahmood. “The market has been keen to sell GBP on the idea of a UK political risk premium. Selecting Mahmood as Chancellor materially cuts that risk,” said Ben Ford, FX strategist at Macro Hive.

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But with little known about her stance on the economy or Britain’s finances, any market reaction to her official appointment could be driven by relief that Miliband has been passed over rather than warmth toward Mahmood.

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A recent Bloomberg Markets Live Pulse survey showed Miliband would be the least popular pick for chancellor among respondents, winning just 5% of votes. However Mahmood, was the next-from-bottom on 11%. Top pick was former Health Secretary Wes Streeting. 

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Mahmood, 45, was born in Birmingham to parents of Pakistani origins. She studied law at the University of Oxford, before qualifying as a barrister, a profession in which she worked until entering Parliament in 2010 after winning the vote in the constituency of Birmingham Ladywood. 

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Her political heroes are former Tory prime minister Margaret Thatcher and Benazir Bhutto, who served twice as Pakistani prime minister in the 1980s and 1990s, she told The Spectator magazine last year. However, she stressed that her admiration was “not for the substance of their politics, but for what they represented for women and the ability to make a contribution.”