British Prime Minister Kir Starmer announced his resignation

British Prime Minister Keir Starmer announced on Monday, June 22, his decision to resign; he will also step down as leader of the Labour Party amid an internal party crisis, according to CNBC. This marks the country’s seventh change in prime minister over the past decade. Starmer himself will go down in history as the Labour prime minister with the shortest tenure, Bloomberg notes.

This move paves the way for Andy Burnham, a moderate left-wing member of the party and former mayor of Greater Manchester, to take power, according to The Wall Street Journal. He has confirmed that he will run for the position.

Starmer acknowledged that his position had become untenable after it became clear that he no longer had the support of the Cabinet or the entire parliamentary caucus.

He said he would continue to serve as acting head of the British government until a new leader is elected, to ensure a smooth transition of power. The deadline for candidates to submit their applications is July 16, and if at least one meets the selection criteria, he could become prime minister as early as July 17 or 18, a Bloomberg source said .

This means that Starmer will represent the United Kingdom at the NATO summit on July 7, the agency adds. By that time, he has promised to release the long-awaited and controversial plan for government defense spending.

Reports of the prime minister’s impending resignation had been circulating over the weekend, and amid speculation on Monday morning, June 22, the British pound fell 0.2% against the dollar, and the yield on 10-year government bonds dropped by one basis point, before returning to its previous level. The FTSE 100 stock index fell by a symbolic 0.05%, but after the official announcement, it recovered from its losses and closed up 0.14%.

For market participants, the key question is whether the change in the head of the Cabinet will lead to increased fiscal risks and a rise in the U.K.'s budget deficit, Bloomberg notes. This could put additional pressure on the national currency and the debt market.

When Burnham announced in May that he intended to run for Parliament, and Starmer found himself on the verge of resigning, the pound sterling fell to a one-month low against the dollar, and the yield on 30-year British bonds jumped 20 basis points to a 28-year high. Several executives from major British companies reminded the Financial Times at the time that Burnham had proposed last year to raise taxes on the wealthy, carry out large-scale nationalization, and significantly increase government borrowing.

Starmer’s resignation sets a precedent in British political practice, the WSJ reports. This is the first time in the history of the Labour Party that a sitting leader has been ousted during his first term in office—and less than two years after a general election.

The need for personnel changes stems from concerns among Labour lawmakers that they might lose their majority in the next election, scheduled for 2029, the publication explains. Bernam’s high approval ratings are seen as a key tool for retaining parliamentary seats and effectively countering the rising popularity of the right-wing populist party Reform UK, led by Nigel Farage.

Last week, Burnham proved he was capable of defeating Reform UK in a special election in the Makerfield district, near Manchester.

Bernam ran unsuccessfully for the leadership of the Labour Party twice—in 2010 and 2015—as the WSJ notes. Until recently, he served as mayor of Greater Manchester—the second-most populous metropolitan area in the United Kingdom.

The investment community is waiting for signals as to whether Bernham plans to increase borrowing or impose further tax hikes—taxes that, according to the WSJ, have already reached their highest level relative to the UK’s GDP since World War II. The increase in the country’s tax burden is driven by the need to fund social programs, as well as demands to increase defense spending.

Bernham had previously actively promoted the concept of “business-friendly” socialism, advocated for the decentralization of power and the transfer of authority from London to the regions, the strengthening of government oversight of the housing and utilities sector, and the reindustrialization of the country’s depressed regions, the publication reports. Nevertheless, in recent weeks he has adjusted his rhetoric toward more centrist positions, promising to adhere to the government’s current budget rules and support efforts to reduce the influx of migrants.

This article was AI-translated and verified by a human editor