Andy Burnham, the incoming Labour leader, faces a greater threat from his own backbenchers than from bond markets, according to Guardian columnist Aditya Chakrabortty. The warning comes as Burnham prepares to take office amid high expectations for radical change.
The Bond Market Myth
Chakrabortty argues that the specter of bond vigilantes is overblown. He notes that gilt yields are often cited as a constraint on progressive policies, but this is based on scare stories rather than evidence. For instance, when Keir Starmer gave his farewell speech outside No 10 on Monday, the 10-year gilt yield actually fell, yet no political editor mentioned it.
He also points out that the UK is not as important in global bond markets as Westminster believes. A hedge-fund manager in Connecticut is more likely to make decisions based on oil prices than on the views of a prospective MP. A recent National Institute of Economic and Social Research analysis found that the global energy shock, not political uncertainty, is the single largest driver of UK bond underperformance.
The Real Threat: Labour MPs
The greater danger comes from Labour MPs who are obsessed with approval ratings and job security. Chakrabortty highlights that both Boris Johnson and Keir Starmer were ousted by MPs fretting over polls, not by bond markets. This reflects a trend where politicians prioritize focus groups and social media over policy or party institutions.
Burnham, who was not even an MP a week ago, now enjoys a wave of support from colleagues eager for selfies. But if he fails to deliver change, that support could evaporate quickly. Two-thirds of Labour MPs were elected after Burnham left Parliament in 2017, meaning they barely know him.
The Demand for Change
The public's desire for change is consistent and urgent. Brexit, Theresa May, Boris Johnson, and Keir Starmer all promised change, but failed to deliver. Burnham now faces the same challenge. If external shocks like crop failures from a heatwave or volatile oil prices hit, and if new Green and Plaid voters drift back to Labour while others see little difference from Starmer's government, Burnham could quickly be seen as a loser.
Chakrabortty suggests practical solutions to reduce reliance on foreign investors, such as issuing long-term bonds for council housing or stopping the Bank of England's quantitative tightening. But the political risk remains: if Burnham fails to make big enough changes, his own MPs may turn on him, just as they did with previous leaders.
