European Equity Strategy: Burnham By-Election Win: UK Equity Implications

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European Equity Strategy: Burnham By-Election Win: UK Equity Implications

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19 Jun 2026 12:12:47 ET │ 11 pages

European Equity Strategy

Burnham By-Election Win: UK Equity Implications

CITI’S TAKE

Andy Burnham’s local election win opens up a challenge to PM Starmer.

While timing remains uncertain, Citi economists’ see any leadership

change as more likely later in the summer. Burnham has thus far given

little steer on policy, but his premiership would likely imply higher

borrowing and potentially higher gilt yields. For equities, higher yields Beata M Manthey, Ph.D.AC

support FTSE 100 outperformance over the more rates- +44-20-7986-4349

sensitive/domestically-focused FTSE 250. At the sector level, Real Estate beata.manthey@citi.com

and Utilities face headwinds from higher yields, while Financials and

David GromanAC

Energy tend to benefit in relative terms. Our prior screen of rates-sensitive

+44-20-7986-4346

UK stocks with deteriorating EPS momentum has underperformed year- david.groman@citi.com

to-date and has staged only a limited recovery over the past few weeks.

Based on prior betas, a move in 10-year gilt yields back to recent highs Nikhil N Jadhav, CFAAC

could imply 5-10% downside for the group. +44-20-7508-0895

nikhil.nitin.jadhav@citi.com

Andy Burnham’s Makerfield by-election win opens his path to challenge PM

Starmer, though the timing of any leadership contest remains uncertain. Citi

economists think a successful leadership challenge would most likely resolve later in

the summer (e.g., September), but a faster route to a Burnham premiership cannot be

ruled out. Citi rates strategists see a “swift coronation” scenario for Burnham as

supportive for gilts near term, aided by political stability. A longer leadership contest