A change at the top: what a Burnham premiership means for UK markets

Keir Starmer has resigned, and Andy Burnham looks set to walk into Downing Street all but uncontested. The market’s verdict so far is striking for how calm it has been — and that calm tells us most of what we need to know.

23 June 2026 · 7 min read

We are entering an all-new period. Yesterday Keir Starmer resigned as Labour leader and will be resigning as prime minister, staying on only as caretaker until a successor is chosen — no later than September. It seems very likely that Andy Burnham will take over. Let’s look into what this means.

The initial market reaction was not one of panic. Sterling and gilts had already softened in the run-up, so as the news of Starmer’s resignation and Burnham’s likely ascension came through, it didn’t show through as a political shock. The FTSE 100 actually closed higher on the day, helped by banks and by its internationally exposed, dollar-earning constituents. The pound, having dipped below $1.32 for the first time in three months, firmed back above it against the dollar and the euro once it became clear Burnham would run effectively uncontested.

The theory at this point must be that Burnham has a clear path to the leadership, and that this will be swift and unchaotic. He will effectively run uncontested.

Of significant note are the upward moves in the UK banks. They rose quite strongly — NatWest over 4%, with Barclays and Lloyds both up around 3.8% — and this suggests the market was not immediately expecting anti-bank policy. The read-across is that investors generally feel the broader economy and the risks around it will not be materially greater under a Burnham premiership.

The leadership field

Andy Burnham, the frontrunner, has returned to Westminster with strong momentum after winning the Makerfield by-election. Wes Streeting — once deemed a likely contender, and one the market saw as potentially quite friendly — has ruled himself out and endorsed Burnham. That decision removes a chunk of the leadership uncertainty. It also raises another question: could Streeting be the next chancellor? That would be seen as a moderating, market-reassuring influence on the future government.

Angela Rayner remains a very possible alternative. Her general inclination towards stronger worker rights, a greater tax-redistribution mix, and lower welfare cuts might be read as negative for market sentiment. Beyond those, we have the outside potential of Ed Miliband, Shabana Mahmood and Yvette Cooper, but they are likely to coalesce around other candidates. At this stage it seems unlikely any of them will mount a significant challenge.

So what of Andy Burnham?

Burnham is not really seen as a traditional Labour leftist. The belief is that he will pursue a more regional, interventionist, pro-devolutionary politics and economics: more public control over services, more local-authority power, greater transport integration, a strong pro-social-housing stance, and a keenness to be assertive about taking failed privatised businesses back into public hands.

Burnham has tried to reassure investors that he would likely stick to existing fiscal rules and would not raise the main taxes on working people — though that isn’t entirely ruled out. We have already seen that under Starmer the party struggled with exactly this tightrope: how far to push taxation and government spending. It is not getting any easier for whomever sits at the very top.

To me, growth remains the main issue the country faces. None of the parties seem to be working towards genuinely better ideas for improving the UK’s growth rate — and that, more than the identity of the prime minister, is what will decide the medium-term direction of UK markets.

Sector by sector

Housebuilders & construction

The assumption is that planning reform, social housing and infrastructure investment are positive for housebuilders. However, I am not really seeing anything credible out there that would genuinely rejuvenate the UK housing market. No one is currently talking about further Help to Buy-style schemes that might reduce buyers’ deposit requirements, or about boosting liquidity across the housing market in a way that would actually help builders. Simply talking about improving the planning system will not be enough. And extending rent-control freezes beyond where they already are is not going to get more houses built. Overall, I don’t see very much changing from the status quo for the housebuilding sector.

Banks

The banks saw good upward moves, really on expectations of stability — no big push towards much higher taxation or government spending. But individually I don’t know that very much would change for them under this new administration either. The rally looks more like relief than a fundamental re-rating.

Utilities & energy infrastructure

There is a significant chance of nationalisation of certain key utilities, which have faced high levels of political scrutiny. That said, there may be pockets — renewable investment, for instance — that see greater central-government attention on increasing output. This is the sector where a Burnham government’s instincts could matter most.

Retail, hospitality & consumer

Burnham has spoken more sympathetically about assisting small businesses, the high streets, pubs, and cost-of-living pressures. An obvious move would be business-rate reform — but given how much the government raises from business rates, that seems unlikely. If anything, I suspect these areas will be marginally worse off: we are more likely to see higher labour costs under this changing government — higher minimum wages or national insurance contributions, slightly more regulation. It certainly doesn’t feel like we are heading into an era of lower levels of any of these, which could put further pressure on some retailers, hospitality and consumer-facing companies.

The bottom line

Ultimately, my feeling is that there won’t be a huge amount of change under a Burnham government — not dramatically in either direction — for UK markets. We are yet to see whether he brings genuinely dynamic leadership; if he does, that could make all the difference. But the key question still needs answering: how can the UK economy grow at a greater rate than it has been?

Some of those issues sit at the macro level and are outside any prime minister’s direct control — the direction of inflation, and through it the cost of energy, both tied more to the crisis in Iran and the war in Ukraine than to who holds the keys to Number 10. On an overall basis, I don’t see that the Burnham situation will be that dramatically different from the current status quo.

Sources & method. Market levels and reactions to 22 June 2026 (Reuters, Proactive Investors, XTB, Bloomberg via The Edge). Leadership timetable per Starmer’s statement: nominations 9–16 July, new leader by 1 September if contested, potentially mid-July if Burnham runs unopposed. This article reflects my personal opinions and is not investment advice. Always do your own research.