London, United Kingdom. Prime Minister Keir Starmer said on Monday he would resign, with a new leader to be in place by the time parliament returns in September. Less than two years after a landslide election victory, he said he would support whoever replaces him.
Pressure on Starmer intensifies
The threat to Starmer, which had been building for months, increased sharply on Friday when Andy Burnham, the Greater Manchester mayor, decisively won a parliamentary election to return to Westminster. He defeated a candidate from Nigel Farage’s Reform UK party, which has led national opinion polls for more than a year.
Labour lawmakers look to Burnham
Burnham’s victory gave hope to Labour lawmakers that he could improve the fortunes of a party that has lost support under Starmer. Burnham, a career politician known for his communication skills, is being seen by some in the party as a potential leader as Starmer’s popularity ratings have fallen to the lowest level for any British leader.
Policy questions remain
Beyond saying that the country needs fundamental change and lower living costs, Burnham has not yet made clear his approach to foreign affairs, the economy and defence. Like Starmer, he could face limited room for action because of pressure from bond market investors opposed to additional borrowing and an electorate that believes the country is not working properly.
Fiscal constraints and market reaction
Britain already has the highest borrowing costs in the Group of Seven wealthy nations because of high debt and interest payments, years of weak economic growth, difficulty cutting spending and the need for investment in areas such as defence. Investors interviewed by Reuters were divided over whether Burnham, who said last September that Britain had to get “beyond this thing of being in hock to the bond markets,” would respect the need to reassure markets.
Citibank assessment
“In our view, a Burnham premiership would inherit a precarious fiscal situation with few tools to deliver meaningful change,” economists at Citibank said on Friday.