Up next in 10
Keir Starmer’s grip on Downing Street is slipping.
Following a seismic by-election victory, Greater Manchester Mayor Andy Burnham is poised to launch a brutal summer leadership challenge that could completely upend British politics. But what does a Burnham premiership actually mean for the City of London, global financial markets, and the pound in your pocket?
We break down the immediate market reaction on the trading floors, from the sudden movements in the FTSE 250 to shifting gilt yields. We also expose Burnham’s secret economic inner circle—featuring former Bank of England Chief Economist Andy Haldane and Lord Jim O'Neill—and scrutinise his radical fiscal agenda. From sweeping tax cuts for pubs to the state nationalisation of Thames Water, we reveal exactly how his "Manchester-ism" style of politics will impact corporate investment, personal finance thresholds, and London's status as a global financial powerhouse.
00:00 - Is Starmer’s Time in Downing Street Up?
00:54 - Who is Andy Burnham & Why is He Popular?
02:28 - Will "Burnhamism" Actually Work in Westminster?
03:28 - The Decline of Starmer's Premiership
05:45 - Is the Market Worried About an Andy Burnham PM Bid?
07:11 - Burnham's Secret Economic Advisory Team
09:05 - What It Means for Your Personal Finances & Taxes
11:13 - The Verdict: End of a 40-Year Neoliberal Era?
13:43 - Where to Follow City AM
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0:00
The clock is ticking for Keir Starmer in
0:02
Downing Street. His Labour rival, Andy
0:04
Burnham, has secured a thumping victory
0:06
in the Makerfield by-election and is now
0:08
poised to trigger a leadership
0:09
challenge, which could see him secure
0:11
the keys to number 10 before the end of
0:13
the summer. For his part, Starmer has
0:15
vowed to fight on and has insisted he
0:17
won't resign. But Labour MPs and members
0:20
have been worried by Burnham's ability
0:21
to see off Reform UK by a comfortable
0:24
margin, something the party will have to
0:25
do again at the next general election if
0:27
it wants to stay in government. So, what
0:29
does a Burnham government mean for
0:31
politics, for markets, and for the pound
0:33
in our pockets? I'm joined by our
0:35
politics and economics reporter,
0:36
Mauricio Anuncor, and our investment
0:38
reporter, Maisie Grace. Uh, Maisie,
0:41
turning to you first of all, as uh,
0:43
famously as City AM's uh, proudest
0:45
Mancunian, um, can you tell us a bit for
0:48
those uh, down south who don't know much
0:50
about him, who is Andy Burnham? Why has
0:52
he been so popular as Mayor of
0:53
Manchester?
0:54
>> Well, put out there, proudest and only
0:56
Mancunian in the office.
0:57
Uh, yeah, so Burnham became Mayor of the
1:00
region when I was 14, nine years ago.
1:03
And he immediately got thrown into what
1:05
was a baptism by fire because less, just
1:07
around two weeks later, the Manchester
1:08
Arena bombing occurred.
1:10
And he really got thrown into this whole
1:12
sense of, okay, let's show, again, his
1:14
people's politics is what he's known
1:15
for, sense of unity, let's all carry on,
1:17
let's stick together, was what, as I
1:19
said, is what he showed. But he sort of
1:21
cemented himself as this king of the
1:23
north, this this people's politician
1:24
during COVID, when during a press
1:26
conference the text came through,
1:28
Manchester under tier three restrictions
1:29
were going to get in 22 million pounds
1:31
of funding. And his response to that
1:32
really sort of cemented him as the
1:34
people's person.
1:36
And as a mayor, he has kept that sort of
1:39
mindset. He's never really been very
1:41
focused on infrastructure and hard
1:42
investment. It's always been the
1:44
people's economy, it's his pledge to end
1:45
homelessness. We had the spice epidemic,
1:47
he was always focused on those things.
1:49
He looked beyond Trafford and Salford,
1:51
which are both of my places that I'm
1:52
from, and town, the city center, to out
1:55
to sort of the places in Manchester that
1:57
were left untouched, which didn't see
1:59
the money, which didn't see the buses
2:00
network, anything like that. So, he's
2:02
always had that focus. And again, that
2:04
came back to his part in creating the B
2:06
network and letting all 16-year-olds
2:08
have free bus travel. He's never been
2:11
one that's been focused more
2:12
on the economy. He's always cared more
2:15
about what the people think of me, how
2:17
am I doing this, where am I going? And
2:19
is that his letdown? Well, we'll have to
2:21
wait and see. So, that's the question
2:22
that I'm asking myself now going
2:24
forward, will his style of politics
2:26
replicate in Westminster?
2:27
>> Mhm. But it I mean, you could talk about
2:29
the economy there, but a lot of um
2:31
commentators in the past few weeks have
2:32
talked about Manchester as the economic
2:35
paradigm for regional growth in the UK.
2:38
Um you know, productivity in Manchester
2:40
has exceeded uh rival cities or nearby
2:43
cities.
2:44
Um house building has massively outpaced
2:46
London and other cities. So, people see
2:49
Manchester as if Burnham can do that at
2:51
the regional level, can he do that the
2:53
same thing at the at the national level?
2:55
>> I think it's important to remember when
2:56
you discuss that, Manchester as a region
2:59
is collectively run by majority Labour
3:02
councils. So, he's never really had to
3:04
face sort of a stern opposition from a
3:06
local level as well. And same within his
3:08
his team,
3:10
it is a red region. It has been a red
3:11
region for most of his premiership. Will
3:13
that change going forward on reform? Who
3:14
knows, but during that time where he has
3:16
been focused on house building, bringing
3:18
in more investment, trying to challenge
3:20
London more as a financial hub, if you
3:21
will, he has had the backing of
3:23
predominantly Labour councilors. So, it
3:26
has been making his job a little bit
3:27
more smooth in that regard.
3:28
>> Marisa, we'll come to the market
3:29
reaction in a second, but first of all,
3:31
what is the the near-term political
3:34
timeline looking like? Because
3:36
uh at the moment, Keir Starmer has said,
3:38
"I'm not going anywhere. Uh Burnham will
3:40
have to challenge me if he if he wants
3:41
to take over as Labour leader." Um but
3:44
at the same time, it is possible that
3:46
Starmer could be forced to resign if
3:48
Burnham can convince enough cabinet
3:50
members uh to depart the government.
3:53
Let's
3:54
>> go back to Boris Johnson's last days in
3:56
government, I think is actually a good
3:57
way to look at it. Is Boris Johnson did
4:00
not want to leave and then, you know,
4:03
all this some cabinet ministers started
4:05
resigning and sort of applying that
4:07
pressure, you know, Rishi Sunak, for
4:08
example, was the sort of big one at the
4:10
time. And if you have a similar
4:14
situation where you have your Admiral
4:16
Banda Shabana moods, perhaps Rachel
4:18
Reeves resign from the government
4:21
because labor, you know, under his
4:23
premiership have been unpopular, then
4:26
that could apply the pressure on
4:28
Starmer. Starmer has said he will stand
4:30
in a new leadership contest.
4:33
Burnham and Wes Streeting, the former
4:35
health secretary, of course,
4:37
have sort of said or very strongly
4:40
indicated they would enter leadership
4:42
contest, but obviously to trigger that
4:44
you need 81 MPs.
4:46
Burnham pretty clearly probably does.
4:49
Streeting is less clear, although he
4:51
says he has that backing.
4:53
No one wants to go over the top and be
4:55
the first one to sort of carry the
4:58
burden of of triggering a leadership
5:01
contest.
5:03
So, I there's a little bit of confusion
5:05
about what will happen now. Starmer said
5:08
strangely this week that he'd offer
5:10
Burnham a big role in government,
5:12
basically maybe a cabinet minister
5:14
position, which would require another
5:17
sort of government reshuffle. He said
5:18
the same about Angela Rayner who has
5:20
also become more critical of the prime
5:23
minister. So,
5:25
um yeah, it's just very confusing at
5:27
times at the moment.
5:29
Obviously, there's a lot of political
5:30
uncertainty, but I think one thing is
5:32
clear is that Burnham does seem to be
5:35
able to be that sort of guy who is very
5:39
popular both among labor members and the
5:42
electorate, you know, very popular
5:44
figure there.
5:45
>> And so, in terms of the immediate market
5:47
reaction on Friday morning, we saw
5:49
stocks down a little bit.
5:52
The more domestically weighted FTSE 250
5:54
down a bit more than the global FTSE
5:56
100.
5:57
The pound dropping a little bit. Gilt
5:59
yields moving a tiny bit, but not no
6:02
massive moves so far. Is that a sign
6:05
that a Burnham a Burnham leadership
6:07
challenge was kind of priced in?
6:08
>> Yeah, so after May local elections and
6:11
it was quite clear that Starmer's
6:14
premiership probably might not last
6:16
till, you know, the next general
6:18
election, the 10 years that he'd
6:20
previously spoken about.
6:22
Markets reacted quite violently then.
6:26
And that was in the
6:28
you know, around 90 Labour MPs
6:32
calling for Starmer to resign, setting a
6:33
timetable, basically saying, "Hey, you
6:36
know, let's get Burnham back into
6:38
Parliament and let's make him Prime
6:40
Minister." And I think at that point,
6:43
you know, speaking to lots of finalists
6:45
this week, the
6:47
that pricing had already been factored
6:49
in. And I think now it's more the
6:51
discussion is more about inflation,
6:54
government borrowing data that we saw
6:56
this morning, which is higher than
6:57
expected, as well as
7:00
interest rate expectations after the
7:02
peace deal between Iran and the US.
7:05
So, I think the market moves might be
7:07
more sort of tied into that rather than
7:09
the political uncertainty. What will
7:11
change everything is who does Andy
7:14
Burnham
7:16
appoint as Chancellor if he becomes
7:18
Prime Minister and who does he align
7:19
himself with in the party and the senior
7:22
figures.
7:23
The the person that has
7:26
clearly been quite critical or has has
7:28
had some sort of fraught relationship
7:30
with Prime Minister is Ed Miliband and
7:33
he one of analysts was saying he has a
7:35
reputation for being anti-growth and
7:37
that would be seen as being a very bad
7:39
pick for from the market's perspective.
7:43
But at the same time, Burnham, as was
7:45
reported yesterday night, is has sort of
7:48
built this economic advisor team or or
7:51
sought out advice from some top
7:53
economists. That includes the Bank of
7:55
England's former chief economist, Andy
7:57
Haldane,
7:59
the former chair of the Office for
8:01
Budget Responsibility, that government
8:02
fiscal watchdog, Richard Hughes, as well
8:06
as Jim O'Neill, who was actually a
8:08
Treasury Minister under the David
8:10
Cameron government, but who worked on
8:12
the devolution plans that, you know,
8:15
allowed Burnham to sort of really
8:17
succeed as Manchester Mayor.
8:20
So, and and I also Carice Roberts, who
8:23
was
8:24
a think tank chief for a sort of
8:26
center-left think tank, and she actually
8:28
worked in Starmer's government. So,
8:31
there's a lot of sort of moving parts
8:33
there where Burnham is trying to sort of
8:35
gain credibility with markets again,
8:37
commit himself to the existing fiscal
8:39
rules. Richard Hughes has spoken about
8:41
about the need to sort of stop keep stop
8:44
changing fiscal rules over time. We've
8:45
had, I think, four four to seven fiscal
8:49
rule changes over the different sort of
8:50
chancellors that we've had. So, look,
8:54
I think markets are kind of wait-and-see
8:56
mode,
8:57
see how everything pans out, who becomes
8:59
chancellor, what growth policies and
9:02
what spending and tax policies emerge.
9:05
>> Uh lastly, Maisie, what what does all of
9:08
this mean for investors, the people
9:10
managing their personal finances?
9:12
Um
9:13
as Maisie touched on there, there's been
9:15
chatter about changes to fiscal policy,
9:17
but at the same time, Burnham has
9:18
recommitted to Rachel Reeves' fiscal
9:20
rules. Um he flirted with the idea
9:23
earlier this week of backing the Waspi
9:25
women,
9:26
uh a a policy which would cost north of
9:28
10 billion pounds, but he's now sort of
9:29
distanced himself a bit. He's also
9:31
recommitted to the pension the pensions
9:33
triple lock, as far as we can tell.
9:35
Um but what what else have we do we know
9:37
about Burnham?
9:38
>> You know, from a personal perspective,
9:40
uh, from what I've been writing and what
9:41
I've been hearing from analysts, he
9:43
again has taken this approach of being a
9:45
man of the people. So, yes, he said at
9:48
the hustings event, I believe it was the
9:50
Wednesday prior to the May elections, so
9:51
probably last week, he said it was
9:53
unfair that the government had not said
9:55
what they were going to do about
9:56
pensions. Starmer said, I think it was
9:57
in 2022 that he would back the WASPI
9:59
women. Obviously, he backtracked. And,
10:01
you know, in this sort of manner of
10:03
trying to get the government to pay
10:04
compensation, he has been before. He was
10:07
pivotal part of the infected blood
10:08
scandal. He's been very vocal in
10:10
Hillsborough, you know, has been for
10:11
many years.
10:12
But, as you're saying, yes, he
10:13
backtracked. He said, "Actually, you
10:15
know what? I'm not going to do that."
10:16
And then he said he was open to having a
10:19
system that was similar to what he had
10:20
in Manchester. So, there again, this
10:22
personal finance thing, he wants to
10:23
bring his Manchesterism within the
10:25
cabinet. That's what it suggests.
10:28
And, you know, again, and then it also
10:29
begs the question to younger voters, to
10:31
people who are just starting out on
10:32
their investment journey, on their
10:33
savings journey, into work, he has
10:35
backed the triple lock. So, in doing so,
10:37
he is potentially making causing
10:40
problems with retirement crisis. People
10:42
aren't saving enough because they can't
10:43
afford to because we're trying to pay
10:45
for the triple lock, and then thresholds
10:47
are frozen. No one can afford anything.
10:49
So, it it, you know, it for me it makes
10:50
the question, you know, what's he going
10:51
to offer to people who are younger, who
10:53
are really starting to raise their voice
10:55
about the problems they're facing, not
10:57
even getting on the housing ladder?
10:58
Student loan debt is up. And those are
11:00
things that he's not discussed yet. He's
11:01
stuck to the line. He's stuck
11:03
maybe Labour have said they were going
11:05
to do but never did. So, I'm intrigued
11:07
to see what he'll do from that
11:08
perspective for investors in personal
11:09
finance because so far he's not really
11:11
offered anything in that regard.
11:13
>> I would I would add there that on the
11:16
website on CityAM.com, we have a
11:18
brilliant story with a list of all the
11:21
policies that Burnham has hinted at, uh,
11:24
sort of backing.
11:25
But, I would add to that as well is that
11:28
with the WASPI women and with some other
11:30
sort of areas of government policy
11:31
making, you know, I think he also spoke
11:33
about trying to reverse parts of Rachel
11:35
Reeves' next tax riser national
11:38
contributions paid by employers. That
11:41
was 25 billion pounds. He's talked about
11:43
trying to cut taxes for pubs. How much
11:46
is that going to cost? There's obviously
11:48
pressures on defense spending. At one
11:49
point he said we'd have a carve out from
11:52
the fiscal rules for more defense
11:53
spending, but now says, "Okay, no,
11:55
actually war bonds might not be such a
11:57
good idea. We need to keep the fiscal
11:59
rules."
12:00
We have that list. We have these ideas
12:02
around devolution and building more
12:05
council houses and taking public control
12:08
of Thames Water and energy companies
12:10
across who operate the national grid.
12:13
How quick are those changes going to
12:14
take place? How much are they going to
12:16
cost? And will Burnham actually really
12:19
stick to them? And actually does he
12:21
require new mandate from the elect
12:23
electorate to sort of push through this
12:26
sort of quite radical agenda that he's
12:27
proposing around
12:29
public control, ending 40 years of
12:31
neoliberalism as he sees it.
12:34
Um
12:35
So, I mean, you know, there are some
12:37
ideas there. They are slightly different
12:39
from Starmer's ideas, clearly. Um land
12:42
taxes, I think, is something he also
12:44
endorses, which is quite interesting.
12:46
You know, where where is this sort of
12:50
going to emerge from? Is it going to
12:51
emerge from a new mandate or is he going
12:52
to sort of try to find ways of twisting
12:56
and turning the Labour manifesto print,
12:58
which has kind of boxed in the
13:00
government so far? So, look, Burnham, if
13:04
he becomes Prime Minister, of course, is
13:06
still a big if,
13:07
um
13:08
has a lot of work to do.
13:10
Um a lot of people, you know, has a lot
13:13
of political capital that he can spend.
13:15
Um but, you know,
13:17
there is a manifesto and I don't know if
13:20
voters will be too pleased if, you know,
13:23
they start seeing some income taxes go
13:25
up, for example.
13:27
>> Yeah, well, we look forward to seeing uh
13:30
Burnham's policies face more intense
13:32
scrutiny by the Westminster media.
13:34
>> And by City A.M.
13:35
>> down south, indeed. Uh we'll leave it
13:37
there. Thanks both very much. And uh
13:39
head over to cityam.com for all the
13:41
latest politics and economics
13:43
developments.
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