Andy Burnham has been caught up in a divisive split over his choice of Chancellor ahead of his arrival in Downing Street next week.

Stimulating growth will be the task of the new occupant of number 11 Downing Street, with “live discussions” said to be taking place over installing Home Secretary Shabana Mahmood in the post.

She has risen above Energy secretary Ed Miliband whose left wing credentials are not favoured by the markets, nor by a growing number of Labour MPs. His opposition to issuing new oil and gas licences in the North Sea has also infuriated the sector and those who are calling for a relaxation of the net zero strategy.

However,  Mr Burnham is facing a revolt from his core support on the Labour left over his plans to appoint Ms Mahmood over Mr Miliband amid claims that she lacks an economic vision and is too divisive for the role.

One Labour MP told The Times: “It’s baffling a lot of people because nobody knows what her views are on the economy. Does she even have any? She’s never done a speech or intervention. It’s just absolutely bizarre and I can’t see her as a sensible appointment.

Rachael Maskell, a Labour MP on the left wing of the party, said appointing Ms Mahmood would be a “mistake” and “Ed has Treasury experience and he’s been able to bring our party together around some very difficult issues.

“Shabana, on the other hand, hasn’t brought our party together. Even this week many of us couldn’t support the legislation she is putting through [on immigration].”

One of Ms Mahmood’s supporters said: “The fact she is willing to do what is right rather than what is popular is a very good trait.” Another pointed out that she worked as a shadow Treasury minister under Ed Balls when Labour was in opposition.

Whoever moves into Number 11 Downing Street will inherit a slow-moving economy with forecasters downgrading their expectations for the remainder of the year.

Annual GDP is now predicted to expand in the range of 0.9% to 1.1%, down from 1.4% last year as the war in Iran resumes and businesses continue to be hit by high energy costs and supply disruption.

Office for National Statistics figures that show the economy outperformed at the start of the year, registering quarterly growth of 0.6% but has slowed in the second quarter.

GDP grew by 0.1% in May despite the Iran war but experts warn that, while the rise is “encouraging”, the UK is still a “stagnant economy”.

The growth in May was because of a rise of 0.3% in services and was partially offset by falls of 0.5% in production, and 0.8% in construction.

The largest positive contribution to services sector output in May 2026 came from professional, scientific and technical activities, which grew by 1.8%. This was driven by a growth of 5.1% in scientific research and development, reaching its highest peak since June 2025.

But production output fell by 0.5% in May 2026, driven by falls in mining and quarrying (down 4.6%), water supply (down 2.4%) and electricity, gas, steam and air conditioning supply (down 0.1%).

Construction output decreased by 0.8% in May 2026, driven by a decrease in repair and maintenance, which fell by 2.1%.

Mid-Market businesses grow

Britain’s mid-market businesses continued to grow in 2026 despite ongoing economic uncertainty, with Scotland emerging as one of the UK’s strongest regional growth stories, according to new data from BDO.

The number of mid-market businesses in Scotland increased by 5.1% year-on-year, outpacing the national growth rate of 4.4%. The country is now home to more than 2,000 mid-market companies.

These businesses – defined as companies generating revenues between £10 million and £500 million, including AIM-listed and private equity-backed firms – are making an increasingly significant contribution to the country’s economy through job creation, investment and innovation.

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