Starmer to Resign After Losing Party Confidence – Pound Falls

Keir Starmer will resign as prime minister after losing the confidence of his parliamentary party, the third UK premier to step down in four years. He told reporters the party had asked itself whether he was “best placed to lead us into the next general election.” He accepted the answer with “good grace.” He left the podium visibly shaken.

Andy Burnham, the mayor of Greater Manchester, is the front-runner to replace him. Labour figures see Burnham as better positioned to connect with working-class voters and the broader electorate. His policy platform at a national level remains untested. His public comments on fiscal discipline have been vague compared to the hard numbers the Treasury will produce at the next budget.

The UK fiscal position is the constraint that will shadow any new leader. Public sector net borrowing has run ahead of the Office for Budget Responsibility's March forecast. Debt interest payments consume a rising share of tax revenue. The gilt curve has already repriced for the widening shortfall. Ten-year yields touched their highest since late 2023 last week.

The pound sold off on the news. It gave back earlier gains. Traders priced in another period of political uncertainty ahead of a leadership contest. Sterling had already been under pressure from weak GDP data and the widening deficit. It now faces fresh election-cycle risk without the cushion of a strong economy.