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Thursday 28th June 2007
New prime minister Gordon Brown has appointed long-time political ally Alistair Darling to replace him as chancellor.
Business leaders have welcomed the promotion of Mr Darling, who until yesterday had served as trade and industry secretary under the previous premier Tony Blair.
The Confederation of British Industry (CBI) said the Edinburgh MP was the "right choice" to succeed fellow Scottish parliamentarian Mr Brown at the Treasury.
CBI director general Richard Lambert praised Mr Darling's previous record as a former chief secretary to the department, adding: "He took over transport at a very difficult time and got an effective grip, and has shown during his time at DTI that he understands what makes a good economy."
Financial analysts have also welcomed the move and stressed that they do not expect to see any major policy changes under Mr Darling's stewardship of the economy due to his close relationship with the former chancellor.
Global Insight chief economist Howard Archer said that he was a "solid, well respected" choice for the role and was on a "similar wavelength" to Mr Brown.
"Consequently, we do not expect to see any major changes in fiscal policy, particularly as we strongly suspect that Gordon Brown will maintain a very keen interest in events at the Treasury," he remarked.
The new chancellor will also have "very limited room for manoeuvre" given the forthcoming spending priorities previously announced by the Treasury, added Mr Archer, who stressed that as such Mr Darling would find it difficult to offer popular tax cuts or public spending increases ahead of the next election.
Analysts also warn that despite inheriting a relatively sound economy from Mr Brown, Mr Darling will have to grapple with the potential problems of higher inflation, rising interest rates and growing debt levels as he assumes his new Treasury post.
Meanwhile his cabinet colleague John Hutton has been given responsiblity for restructuring the government's relations with the business community in a newly created Department for Business and Enterprise – formerly known as the Department for Trade and Industry (DTI).
Succeeding him as work and pensions secretary is Peter Hain, who moves from his previous role of Northern Ireland secretary. He will remain head of the Wales Office.
Describing his appointment as a "welcome move" Paul Kenny, general secretary of the GMB union, said that the organisation looked forward to working closely with the minister given his "excellent track record".
"We look forward to constructive talks on the many items in his in tray including the fundamental reform of the UK pension schemes, dealing with insolvent pensions, corporate manslaughter and Remploy," said Mr Kenny.
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