Director Weekly  Andy Burnham is poised to take the reins of government but so far, we have many more questions than answers about his plans for economic policy

Only after that, we are told, will he make announcements about his Cabinet. It is widely expected that Shabana Mahmood – the current Home Secretary – will become Chancellor.

Burnham and his new ministerial team will enter office with Parliament in recess, but their holiday plans may need to be curtailed: there’s much work to do to get to grips with the country’s economic challenges. The latest ONS data shows that the trend in GDP is slowing, despite retail sales supported by the warm weather, as disruption caused by war in the Middle East is felt in supply chains, and suppresses output in a variety of sectors.

In an ideal world, we might hope for rapid measures to boost business confidence and get the economy moving.

As yet, we’ve heard a mix of ideas from the prime minister-in-waiting about his priorities. Prior to the 2024 election, Labour was at pains to talk up its economic credentials, defining growth as one of its central missions. There was much business could agree with in its vision, for all that it was later undermined by slow delivery and outright anti-growth policy decisions.

But Burnham’s guiding vision remains unclear. He has committed to the existing fiscal rules and to manifesto pledges on income tax, VAT and National Insurance. But in comments to LBC, Burnham said “there was ‘some room within that manifesto for movement on tax’.  There’s talk of an early “cost of living” package and giving people “breathing space”. But if costs on businesses keep rising, so will prices facing consumers. Talk of faster housing delivery has promise, although the focus on council house delivery seems misplaced. Comments on welfare reform are focussed on getting people off welfare into work, but demand for workers is weak following sharp rises in labour costs and a high level of business concern over the Employment Rights Act.

And there’s no denying the severity of the fiscal challenges we face, nor that they are largely on the spending side of the ledger. In the last few days, both the IMF and the OECD have published their country reports for the UK. And we’ve also had the annual “Fiscal risks and sustainability” report from the OBR. All three highlight a similar suite of fiscal challenges for the UK: health spending and pensions apply particular spending pressures – both products of an ageing population, accompanied by rising debt interest payments and defence commitments. All note how much easier these burdens would be to bear if the UK can improve its productivity performance, and all note that the tax burden has already risen sharply in recent years and further rises risk damaging incentives to work and invest.

Business will want answers, quickly, about how far economic and business policy will change in relation to these growing challenges. Is it a case of minor adjustments to the course already plotted under the Starmer government? Or more radical shifts in priorities? Sticking to the fiscal rules doesn’t prevent departmental priorities from shifting after all, nor taxes from rising; the emphasis on localism has clear implications for the Industrial Strategy. And borrowing could still be increased to fund investment – with limitations.

Unless a new vision is set out quickly, each espoused priority will open up new questions – and the last thing business needs is yet another summer of unchecked policy speculation.

For that reason, we will also be hoping that the new PM and Chancellor refrain from initiating a new Spending Review for delivery in the autumn. That, too, would be destabilising and risk being rushed – as well as absorbing officials’ time when they should be working to deliver for business.

Andy Burnham inherits a situation where government policy in the round is adding to business uncertainty rather than alleviating it, impeding business investment rather than unleashing it, and jeopardising future living standards rather than raising them sustainably. Rapid action to reverse these would be very welcome indeed.

Read about the latest data from the IoD Directors’ Economic Confidence Index here.