Andy Burnham must avoid another “summer of speculation” on tax and spend that would spook British business, the chief executive of the CBI has warned.

As Burnham prepares to take up the Labour leadership on Friday, with a new cabinet to be announced on Monday, Rain Newton-Smith urged him to tread carefully.

“What we mustn’t have is a summer of speculation where there’s kite-flying over, ‘we might cut spending in this area or boost that’ – or the more damaging one is, ‘we might increase this tax or maybe we won’t’. I think that uncertainty is just really difficult for business,” she told the Guardian.

Labour’s last two summers were dogged by leaks and speculation about what might come in Rachel Reeves’s autumn budgets.

One of Burnham’s key decisions is whom to appoint as chancellor, with briefing and counter-briefing over the possibility of the energy secretary, Ed Miliband, taking on the role. Newton-Smith said that, unlike some City investors, she was “not terrified of Ed Miliband” – nor of any of the putative candidates.

But she stressed that whoever takes over should not “feel bounced into making decisions in the first couple of weeks” and instead should take the time to listen to business. “I would say, let’s walk to the right answers, not run to the wrong ones.”

“What business wants to see is evolution, not revolution,” she added. “I think what any chancellor needs to do is early on set out a credible fiscal plan with fiscal rules that that underpin it.”

She praised Burnham’s business-friendly approach to bringing investment and growth to Greater Manchester as mayor, and warned against some of the more radical ideas being floated by allies – in particular, plans for renationalising key utilities.

“Renationalising things is incredibly expensive,” she said. “Obviously it depends on which sector we’re looking at, but what we do know is that private sector investment has delivered a lot of high-quality outcomes, and I think if you’re going to move away from that, there’s a huge cost involved and ultimately that cost falls on ordinary people.”

Instead, she called for a new generation of public-private partnerships to fund major projects. “We need more homes, we need more reservoirs, we need more energy-efficient buildings. And I think we’ve got to be thinking about public-private partnerships.”

With Burnham expected to announce a package of cost of living measures early in his tenure, Newton-Smith also urged him not to neglect businesses’ costs – in particular, sky-high energy bills, a longtime CBI bugbear.

“Our view is, you can’t address the cost of living without addressing the cost of doing business,” she said. “From the business leaders I speak to, whether you’re a supermarket, whether you’re a food and drink manufacturer, even financial services when they’re looking to expand, the cost of data [and] energy costs is a really big issue for our overall competitiveness for so many different firms.”

A paper published by the CBI and Energy UK this week pointed out that UK businesses’ electricity costs are 45% above the G7 average. It called for the costs of the clean energy transition to be moved off businesses’ bills, by scrapping levies such as the renewables obligation. These costs could then be met either by the taxpayer or through a privately financed “energy transition funding scheme”, they argued.

Newton-Smith was at the Mansion House dinner on Tuesday, where Reeves gave what was expected to be her last major public speech as chancellor.

The CBI boss praised Reeves’s record in some areas, including boosting public investment, but called on Burnham to “pick up the pace”.

On another of the key challenges in Burnham’s inbox – the UK’s relationship with the EU – Newton-Smith said he should complete the long-awaited “reset” by quickly rescheduling the summit postponed by Keir Starmer when he resigned last month.

But she is sceptical about the need to rush to rejoin the single market and customs union – let alone reverse Brexit altogether.

“Rejoining the single market and customs union is just not on the table right now on the European side … the government has taken absolutely the right approach. We’ve got the right framework for the UK-EU reset. We need to go in and negotiate hard and deliver that.”

Newton-Smith, 51, took over as the CBI’s chief executive in 2023, after the organisation was rocked by allegations of sexual misconduct, first published in the Guardian. She had previously been its chief economist.

Three years on, she says she is confident that the CBI’s culture, which made some women feel their concerns were ignored, has shifted significantly.

“I’m super proud of where we are now,” she said. “Culture is a living, breathing thing. And I think you always have to make sure that people feel they can raise issues internally, externally, and that you’re open when they do. But I think any leader will say that work is never done, right?”

The CBI’s income plunged in 2023, raising questions about its viability, as a wave of member businesses left in protest at the allegations of sexual misconduct.

Newton-Smith declined to say whether the number of members was back to where it was before the crisis, but insisted it was growing, as was its income. “We’ve changed. The business landscape has changed.”