Main PointsA sitting Labour MP resigned from his seat, paving the way for Greater Manchester mayor Andy Burnham to potentially return to Westminster and mount a challenge to prime minister Keir Starmer’s Labour leadershipWes Streeting, another likely contender for challenging Starmer, resigned as UK health secretary, saying he has “lost confidence” in the prime minister as leader of their partyFormer deputy leader Angela Rayner has suggested she could enter any leadership contest. She has been cleared by tax authorities of deliberate wrongdoing or carelessness over her tax affairsStarmer’s position as prime minister has become increasingly tenuous since Labour’s hammering in elections across Britain last weekKey ReadsBritish government bonds, stocks and sterling fall
British government bonds, stocks and sterling fell on Friday, as domestic political uncertainty clashed with global worries about an inflationary shock, leaving UK assets in the mire.
Sterling fell to a five-week low and is down almost two per cent against the dollar this week, set for its biggest weekly drop since November 2024.
British prime minister Keir Starmer is in a battle to hold on to power after his health minister Wes Streeting resigned from government, while others positioned themselves to challenge his leadership, following disastrous local election results last week.
Markets are concerned that a new leader may be willing to loosen fiscal policy more, with British government borrowing costs up sharply again and UK bank stocks selling off on Friday.
Greater Manchester Mayor Andy Burnham has been offered a path for a possible leadership challenge after another Labour lawmaker said he would resign his parliamentary seat. If Burnham were to win the seat, he could then challenge for the party leadership.
“Market’s fear is that Burnham would be more left leaning, and we could see further increase in deficits,” said Jefferies economist Mohit Kumar.
“Our base case is one of a managed exit for Starmer and Burnham likely becoming the next PM,” he added.
The domestic political drama has coincided with another rise in energy prices on Friday and growing evidence that the economic damage from the Iran war is hurting.
US inflation data this week has shown consumers and factories are starting to see big increases in price pressures as a result of the war, which has pushed up the price of crude by over 50 per cent.
The pound has tended to suffer against the dollar when tensions between Washington and Tehran flare or oil prices rise, given Britain’s dependence on energy imports and the economy’s sensitivity to higher fuel costs.
Sarah Burns – 2 hours ago
Housing secretary urges Labour colleagues to put ‘country first, party second’
Housing secretary Steve Reed has been on the media round this morning urging Labour colleagues to put the “country first, party second”, even as he admits Keir Starmer is “unpopular”.
When asked by Sky News whether replacing an unpopular prime minister is something the party should consider, he said: “Each of the last four prime ministers, in turn, has been the most unpopular prime minister we’ve ever had.”
He added: “What we need to do is all of us come together behind the prime minister and focus on how we can deliver the change the British public want to see faster.”
A leadership challenge seems all but inevitable, with greater Manchester mayor Andy Burnham potentially throwing his hat in the ring, but Reed rather bluntly stated “there is no leadership challenge” and hit out at the “internal-facing nonsense” plaguing the party.
He told the BBC: “If people wanted to gather the nominations then it’s open for them to do that – they would need to find enough Labour MPs that wanted to endorse them but nobody has done that.
“It’s been a very difficult week but we need to take a breath now, take this weekend to reflect on what’s going on, and come back next week and focus on the country we were elected to serve.”
Commenting on reports suggesting Starmer was considering his position last night, Reed told Times Radio “that isn’t true”.
Labour MP Josh Simons announced yesterday that he would stand down from his constituency in Makerfield to make way for Burnham to stand as a candidate in a byelection.
Simons said he believed Burnham could “drive the change our country is crying out for”.
“We have lost the trust of those our party was built to serve. It is my unwavering belief that nothing short of urgent, radical, courageous reform will make a difference,” he told BBC Radio Manchester this morning.
Britain’s housing, communities and local government secretary Steve Reed. Photograph: Jonathan Brady/PA Wire
Sarah Burns – 3 hours ago
Suave communicator and sharp dresser: who is Andy Burnham?
Mark Paul, our London correspondent, profiled Greater Manchester mayor Andy Burnham in 2024. This is an extract from his article:
“You might expect the mayor of a metropolitan area of 2.8 million people, one of the fastest-growing economic regions in the UK, to wear a jacket and trousers on the job. Burnham dresses well, but this is Manchester – he must reflect its vibe. Today he wears a fitted black blazer over a jet black T-shirt. His skinny black trousers alight on to black suede shoes. He has a bee – Manchester’s civic emblem – tattooed on his right bicep.
He is cool, collected and in control of his patter. He also knows his audience and, despite a carefully affected insouciance, is clearly well prepared. Burnham says he can’t fathom the Dublin riots of last November with their racially tinged edge: “I know Dublin, and that’s not Dublin and its people.”
You can read the full article here.
Sarah Burns – 3 hours ago
Britain’s new health secretary, James Murray, has arrived at Downing Street.
Murray said “good morning” to members of the press, but did not answer a question about Keir Starmer’s future.
Newly appointed health secretary James Murray arrives in Downing Street on Friday. Photograph: Peter Nicholls/Getty Images
Sarah Burns – 4 hours ago
Uncertainty over Starmer future puts investment at risk, say CEOs
Bosses of some of Britain’s biggest companies have voiced dismay at the turmoil in Westminster, warning that uncertainty over Keir Starmer’s future is putting at risk investment decisions and the country’s reputation.
Chief executives have told the Financial Times that calls for the prime minister to quit, Wes Streeting’s resignation and Andy Burnham’s move to return to parliament were a far cry from the stability and certainty promised by the ruling party in the lead-up to the 2024 general election.
One FTSE 100 chief executive said the government had over the past week “myopically focused on its own infighting and scandals, rather than focusing on the long-awaited action it should be delivering”.
Another chief executive said days of jeopardy for Starmer since Labour suffered dire losses in local and devolved elections amounted to a “lost week in terms of any progress on objectives”, while former J Sainsbury boss Justin King accused ministers of failing to learn “the lessons of the last years of the Conservative administration”.
British prime minister Keir Starmer and Conservative Party leader Kemi Badenoch. Photograph: Stefan Rousseau/AFP via Getty Images
Sarah Burns – 4 hours ago
Labour’s deputy leader, Lucy Powell, will say Andy Burnham, Wes Streeting and Angela Rayner should all be seen as “key players” in the party in a speech on Friday.
Powell will also repeat her support for Burnham’s efforts to return to parliament after Josh Simons, the MP for Makerfield, said he would stand aside to let him run for the seat in a byelection.
She will say she is confident Burnham will have the support of the “vast majority of the party and movement” to make a bid to come back to Westminster.
Powell was the only member of Labour’s ruling body to vote in favour of allowing Burnham to stand in a byelection in Gorton and Denton earlier this year, but he was blocked from doing so and the Greens took the seat.
Starmer will not seek to block Burnham from standing this time around, it is understood, but it is not yet guaranteed that he will be chosen as the candidate.
Powell is expected to tell the Fire Brigades’ Union conference: “The election results last week were deeply painful and difficult for our party, and the aftermath has been unedifying for us all too.
“We don’t do hostile takeovers in Labour for a reason. Keir is the leader, and I warned against bloody internal battles reflecting badly.”
But she will also warn that it is a “mistake” to think Labour does not have “further to fall” after dire election results for the party in local polls last week.
Sarah Burns – 4 hours ago
Good morning, and welcome to another day of political turmoil in Westminster.
As we head into the weekend, moves are well advanced to challenge the leadership of prime minister Keir Starmer.
Andy Burnham, the mayor of Greater Manchester, confirmed on Thursday he would ask Labour’s ruling national executive committee (NEC) to allow him stand in a forthcoming byelection – a necessity in running for the top spot.
And, according to reports in the Guardian, allies of Starmer have confirmed he would not seek to block him doing so.
It means, of course, that Burnham now has a potential route back to parliament and a chance to become Labour’s next leader. It all comes after an MP said he would trigger a byelection by standing down from his seat.
That move has ended days of speculation about whether Burnham could secure a possible path back into Westminster, and underlined the increasingly precarious nature of Keir Starmer’s premiership.
Meanwhile, Wes Streeting has stood down as health secretary after seemingly failing to get the numbers to launch a challenge against the prime minister.
Angela Rayner, the former deputy prime minister, has settled some tricky tax affairs, paving the way for her own return to frontline politics. Further developments on Friday should prove interesting.