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“The market is steady, but I think anxious” about the next chancellor, Jane Foley, head of FX Strategy at Rabobank, told Bloomberg Radio. “Miliband would perhaps cause it the greatest concern, because of his positioning on the left.”

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Still, that confidence may be tested if Burnham opts for Miliband and the uncertainty has left investors more cautious on longer-dated gilts, which tend to be more sensitive to that type of risk than shorter ones.

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Miliband once served as special adviser to Gordon Brown when he was chancellor, and a return to the Treasury in the top job would complete a remarkable turnaround for the 56-year-old. He famously stood against his older brother David to win the Labour leadership in 2010 before losing to David Cameron’s Conservatives five years later, a defeat that appeared to mark the end of his career in top-level politics. 

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Miliband rebuilt his image first as an influential backbencher during the Jeremy Corbyn years, then as energy secretary under Starmer, and now at the center of Britain’s latest political upheaval. He was one of the first cabinet ministers to privately urge Starmer to go, despite being a close ally, and was then at the center of maneuvers to replace him, people familiar with the matter previously told Bloomberg. 

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Then, Miliband lent staff to Burnham’s campaign in Makerfield and went north to personally canvass support for him. Miatta Fahnbulleh, a Miliband ally and former minister in his energy department, is working on Burnham’s economic policy. Grace Pritchard, who previously worked on communications for Miliband, now handles media for Burnham. Other Miliband advisers are also working directly on Burnham’s transition into government, people familiar with the matter said.     

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Miliband has also privately suggested Burnham consider giving his brother a role. After relations became strained between the brothers when Ed beat David to the leadership, the older Miliband left Parliament in 2013. He’s now eager to return to government, potentially as Foreign Secretary, a role he held under Brown, people familiar with the matter said. That’s prompted concern within Labour about the prospect of having more Milibands in top jobs than women.

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Ed Miliband is a skilled operator with Treasury experience who can implement an agenda, said Rob Ford, professor of politics at the University of Manchester. That also brings danger, he said.

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“The relationship between No 10 and No 11 is always the most crucial in government,” Ford said. “If you have two principals who are both ambitious, independent individuals who don’t always agree on everything, that way lies trouble.”

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Miliband’s baggage means there’s no shortage of Labour MPs with strong opinions, and Burnham is being lobbied by some against appointing him, people familiar with the matter said. 

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Having Miliband as chancellor would alienate at least a quarter of the parliamentary party, given concerns he’s an electoral turn-off in more affluent southern seats that Labour still needs, one MP said. A second said that despite Miliband’s credentials for the job, Burnham shouldn’t appoint him because opposition politicians and the media would seize on it, spoiling the good vibes around the prospective premier. Another said the appointment would damage the party because Miliband is seen as a net-zero ideologue unsympathetic to the policy’s impact on living costs.

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Allies of Miliband say that he’s privately urged Burnham to stick to Reeves’ fiscal rules to reassure investors, a position which the Manchester politician publicly adopted during his campaign in Makerfield and which has kept markets settled. But Miliband still has a perception problem with investors, according to Mark Dowding, chief investment officer at RBC Bluebay.

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“Burnham does need to tread very carefully,” Dowding said. “I’m not sure that anyone in markets wants to see Ed in that chair.”

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—With assistance from Lucy White, James Woolcock, Selina Chen, Jacob Reid and Alice Gledhill.

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