Andy Burnham’s victory in the Makerfield by-election moves him a step closer to Number 10. But uncertainty over the timing of a challenge to Sir Keir Starmer, the prime minister, and the lack of clarity on Burnham’s economic policies, meant immediate market reaction was subdued.
Investors’ concern remains that a Burnham premiership would drag the Labour government to the left and loosen its stance on spending and borrowing. “He has yet to demonstrate a clear willingness to say ‘no’,” said James Carter, co-head of fixed income at W1M, citing Burnham’s support of the state pensions triple lock and other commitments.
News that Burnham was being advised by Richard Hughes, former head of the Office for Budget Responsibility, was taken as a positive sign by investors. But many continue to believe that Burnham would change the fiscal rules and borrow more.