Andy Burnham's spending plans could spook the markets and lead to a drop in the pound, experts warn. The Greater Manchester Mayor is expected to begin moves to become Prime Minister within days, should he win the Makerfield by-election.
Renationalisation Plans Raise Concerns
Burnham has already announced plans for sweeping renationalisation of major industries, if he enters Number 10. It means any future Burnham regime could need to hike taxes or borrow more money, in an attempt to raise the cash he needs.
Matthew Ryan, Head of Market Strategy at Ebury, exposed that Mr Burnham "is the candidate that currency markets will be watching most closely." Mr Ryan said the wannabe PM was the "clear and obvious" choice to walk into No10, with his potential win representing "the most significant leftward shift" out of those running.
UK markets could "reprice UK fiscal risk accordingly and quickly" because of Mr Burnham's "track record and underlying instincts" of "higher spending and taxation", the expert said.
Sterling Under Pressure
Mr Ryan said that "sterling would face downside pressure" should an incoming Labour Prime Minister increase borrowing and raise taxes. While serving as Mayor of Greater Manchester, Mr Burnham brought public transport under his control, and has suggested he would embark on a major project of renationalisation if he has the chance to run the country.
Such a move would reportedly see him take control of water and energy, which critics say would mark a significant leftward shift and broader increase in government expenditure.
Political Reactions
Robert Jenrick, the economic spokesman for Reform UK, warned that Mr Burnham was "obsessed with high tax and spend." He said that "working people thought they got a raw deal under Starmer", but that a future Burnham premiership "will hammer them even harder."
"Investors are already bracing themselves for one of the most left-wing Prime Ministers in modern British history," Mr Jenrick warned. The Greater Manchester Mayor's march on No10 would "spook the markets, crash the pound, and wreck confidence in our economy," he added.
"Only Reform UK can stop Andy Burnham getting anywhere near No.10 by defeating him in Makerfield," he declared.
Shadow Chancellor, Sir Mel Stride, said: "Britain's bond market is flashing red because investors are rightly panicking over Labour's hard-left lurch. Taxpayers are paying a 'Burnham Penalty', before he's even got his hands on the keys to No10. The amount we're paying on debt interest is more than £100bn a year - that's double the defence budget. It's totally unsustainable and will bankrupt Britain. Only the Conservatives have a plan to get debt under control through our Golden Economic Rule."
By-Election and Leadership Contest
The Makerfield by-election will take place this Thursday, and was triggered following the resignation of Labour MP Josh Simmons. Should he top the ballot, Mr Burnham is expected to mount a challenge against Sir Keir Starmer, with some reports suggesting he could swiftly demand Sir Keir set out a timetable for his resignation.
Wes Streeting, who resigned as health secretary after disastrous local elections in May, has also said he would throw his hat in the ring. Speaking in central London, the Ilford North MP took an apparent swipe at his rivals, saying Labour should not "play fast and loose with the public finances or the trust of the people." He warned that any contest between rival camps after the keys to No10 should not descend into candidates making the "most expensive and popular pledges" to win over members.
A defiant Sir Keir rebuked his challengers saying he would "bring back the change that people desperately need." Despite the turmoil embroiling his party, the Prime Minister pledged to "carry on with what [he] was elected to do."
The Labour Party declined to comment, and Mr Burnham's team was approached.
