Keir Starmer names Minouche Shafik as top economic adviser

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Former Bank of England deputy governor Baroness Minouche Shafik is to be Sir Keir Starmer’s chief economic adviser, as the government seeks to strengthen its efforts to bolster UK growth and productivity.

Government officials confirmed Shafik will take up the Number 10 post as the prime minister tries to boost his inner team ahead of a crucial Budget, expected in November.

Shafik, who also served as deputy managing director of the IMF and vice-president of the World Bank, will be tasked with improving the government’s economic credentials with businesses and international investors, as well as acting as a bridge between Starmer and the Treasury during Budget preparations.

The move is part of a wider shake-up of Starmer’s team ahead of the start of a new parliamentary term on Monday. “We need to sharpen things up,” said a Labour official. “We’ve got to get things moving more quickly.”

Reeves’ allies insist the chancellor has been pushing for a heavyweight economics adviser to be installed in Number 10 and have rejected suggestions the move could clip her wings.

Allies of the prime minister say the appointment of a senior economic adviser will improve co-ordination of economic policy, while adding that it would be useful to insert some “grit” into the process.

Reeves was criticised by many Labour MPs over her politically disastrous plan to strip winter fuel payments from 10mn pensioners, as well over recent attempts to save £5bn from the welfare budget, now abandoned.

Torsten Bell, pensions minister and former head of the Resolution Foundation think-tank, has been drafted in by Reeves to help with preparing the Budget.

Reeves is widely expected to be pushed into raising taxes in pursuit of government spending pledges and her own fiscal rules in order to fund day-to-day spending from revenues by 2029-30.

Treasury officials are now examining a host of tax changes, including higher levies on property, as the chancellor confronts a hole in the public finances of at least £20bn.

Shafik, who entered the House of Lords in 2020, resigned as president of Columbia University in New York last August after months of criticism of her handling of student protests in response to the Israel-Hamas war.

In a letter announcing her resignation, Shafik — who was the top civil servant at the then Department for International Development between 2008 and 2011 — said she had been asked by Starmer’s government to chair a review of “its approach to international development and how to improve capability”.

Shafik, who has a PhD in economics from Oxford university, was deputy BoE governor for markets and banking between 2014 and 2017. Some of her supporters in parliament believe she could be a contender as a future BoE governor when Andrew Bailey’s term expires in 2028.

This week Starmer began his Downing Street overhaul by removing Nin Pandit from her role as prime minister’s principal private secretary and a core member of his inner team.

She will leave her post in September after only 10 months and will be replaced by Dan York-Smith, a Treasury tax and welfare expert, according to Labour officials. York-Smith’s appointment is further evidence of Starmer’s attempt to get a tighter grip on economic policymaking.

Downing Street declined to comment on Shafik’s appointment.