UK Watch: Mind the leadership gap

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UK Watch: Mind the leadership gap

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UK Watch

Mind the leadership gap

Economics: What happens next?

22 June 2026

Keir Starmer has resigned as UK Prime Minister. Nominations to elect his successor

would open on July 9 and close by the time Parliament goes into summer recess on 16 Macro

July. Andy Burnham has set out his intention to stand. If Andy Burnham is the only United Kingdom

candidate, then he would effectively be elected unopposed, resulting in a swift Sonali Punhani

transition. However, if the leadership is contested, then Labour would hold a leadership UK Economist

contest which according to a Survation poll, Andy Burnham would be viewed as a MLI+44 (UK)20 7996 1032

favourite to win. We think a swift transition is the more likely scenario, which could sonali.punhani@bofa.com

imply a new PM in a few weeks. Ruben Segura-Cayuela

Europe Economist

Economic and fiscal implications of a leadership change BofA+34 91Europe514 3053(Madrid)

Political uncertainty increases policy uncertainty, which could weigh on growth. Fiscal ruben.segura-cayuela@bofa.com

pressures are high in every scenario. In any case the fiscal space has reduced- we Agne Stengeryte, CFA Rates Strategist

estimate that since March, the fiscal headroom has been reduced by close to £10bn MLI (UK)

from £23.6bn. So far commentary from the soft left (Andy Burnham) is that fiscal rules +44agne.stengeryte@bofa.com20 7995 3536

are likely to be met, which we expect in the near term to avoid a negative market Mark Capleton

reaction. But it may get more complicated in the medium term. Some in the soft left Rates Strategist

have suggested tweaks in the fiscal framework, which, if they emerge, could increase MLI+44 (UK)20 7995 6118

risks of a rise in borrowing. mark.capleton@bofa.com

Kamal Sharma