Client Update - 15th May 2026

No Labour Prime Minister has ever been removed from office through a formal leadership contest. I wonder if this fact might change in the coming months.

The combination of Andy Burnham’s plan to return to Westminster, Wes Streeting’s resignation, and mounting pressure on Sir Keir Starmer, has created a level of uncertainty that is rippling through UK financial markets.

Andy Burnham has formally announced that he will seek Labour’s National Executive Committee (NEC) approval to stand in the Makerfield by election after MP Josh Simons stepped aside to give him a route back to Parliament. Burnham’s allies have made clear that if he wins the seat, he would immediately trigger a leadership contest, positioning himself as the candidate to “change Labour for the better.”

Makerfield is far from a safe Labour seat. Reform UK won more than 50% of the vote in local elections across the constituency’s wards, compared with Labour’s 23%—a dramatic reversal of Labour’s historic dominance. Nigel Farage has already vowed to “throw absolutely everything” at the by election, signalling a fierce contest awaits.

This all comes after former Health Secretary Wes Streeting resigned this week, criticising Starmer’s lack of “vision and direction.” Although he has not yet launched a leadership bid, his departure has added to the perception of a government losing internal cohesion. Starmer has since appointed James Murray as the new health secretary.

The prospect of an internal leadership contest apparently does not sit well with Labour MP’s and reports this morning suggest Starmer is under intense pressure from senior cabinet colleagues to set out a timeline for his departure to avoid a damaging civil war. One cabinet minister indicated he would “consider his position overnight,” though No. 10 insists he will not walk away.

More than 80 Labour MPs have now called for his resignation following disastrous local election results, where Labour lost 1,498 council seats.

UK Gilt (Government debt) yields have spiked to over 5% and the Sterling has fallen in value due to potential policy drift and fiscal uncertainty. A more left leaning Prime Minister could increase public spending and therefore our debt burden, when already £1 of every £10 the Government spends goes on the cost of servicing our current debt.

Whilst Burnham’s candidacy still requires NEC approval, Starmer has signalled he will not block him this time. If approved, Burnham faces a difficult contest: Labour’s majority in Makerfield is 5,399, but Reform UK is now the dominant force locally. Allies argue Burnham could win back voters lost to Reform and the Greens, positioning him as the figure capable of reversing Labour’s decline. If Labour want to stay in power at the next election, they will have to defeat a resurgent Reform party, and Andy Burnham has the ability to strike the first blow this summer.

UK politics has certainly become more unstable, with questions over Labour’s leadership and the rise of smaller parties adding to uncertainty. This has increased short term volatility in UK shares and government bonds, but it does not change the importance of long term fundamentals. We continue to focus on diversified portfolios, selective opportunities in UK gilts when yields are attractive, and high quality companies—many of which earn most of their profits outside the UK. Political headlines may be noisy, but financial plans remain anchored to your long term goals, not day to day events. Do have a good weekend.