Andy Burnham’s path to Downing Street has been all but cleared after Darren Jones ruled out entering a leadership race, spilling over to further speculation over the look of the next government’s Cabinet. 

Jones, a close ally of Sir Keir Starmer, was rumoured as a potential challenger to Burnham but the chief secretary to the prime minister has now dismissed the prospect of a leadership bid.

“Andy Burnham is going to be the next prime minister,” Jones said. “If there was a contest of Labour Party members, he would win. 

The question for me is, well, what would the benefit be to the country and to the party of a leadership contest?” 

Jones suggested more than 100 MPs had asked him to stand in a leadership contest or were worried about the lack of focus on economic policies. In a meeting with the likely next Prime Minister, he told Burnham to “set out your economic policy” as backbenchers were concerned about the next government “moving too quickly” on investment and borrowing. 

Jones added there was “room to borrow a little more” though he warned that it was “increasingly expensive” to take funds from lenders. He also warned he did not put Burnham though a “pub quiz” on the fiscal rules, with the former Manchester mayor failing to explain them in an interview with the BBC.

“I’m all for investing into new towns and mayoral development corporations that give apprenticeship opportunities, that support British business, that can help fix our energy system. 

“But you can do that without broad-brush borrowing and spending, which actually doesn’t really deliver the outcomes that you want to achieve.”

One of Burnham’s advisers on the economy, the former Treasury minister Jim O’Neill, said he backed further borrowing to invest in infrastructure. He told The Guardian he would make an existing infrastructure body independent in order to provide information on potential growth impacts of investment. 

“There is a lot more room under the existing fiscal rules to borrow for investment, and the next chancellor should take advantage of that,” O’Neill said. 

“We can do way more to boost infrastructure projects, and that is what we should be doing.” However, the former Goldman Sachs top dog also said any further borrowing would have to be accompanied by spending restraint elsewhere – and wholesale welfare reform.

Jones also hinted that Rachel Reeves was set to lose her job as Chancellor as he said a successor should have “an important relationship with the Prime Minister” and help deliver on the leader’s priorities. 

Several reports have suggested that Reeves will be ousted and instead offered a more junior Cabinet role. 

Potential candidates for the Chancellor role include Wes Streeting, who backed Burnham for the leadership, and John Healey, who pushed for the government to consider war bonds to lift defence spending. Energy Secretary Ed Miliband is known to want the job but the left-winger’s appointment to the Treasury would likely rattle markets.