LONDON: British equities dropped on Friday along with bonds and the pound as investors weighed a possible leadership challenge to Prime Minister Keir Starmer from Greater Manchester Mayor Andy Burnham, while also worrying about inflation risks.
Burnham said on Thursday he would seek to contest a parliamentary seat becoming vacant after a colleague decided to stand down. This could pave the way for Burnham to challenge Starmer, who has been under acute pressure from his party after Labour’s poor performance in local elections last week.
Investors worry that Burnham’s “business-friendly socialism” could lead to more government spending and borrowing, straining Britain’s already stretched public finances.
“Markets won’t like it and they won’t like the idea of the Labour party anointing a left-leaning PM whose fiscal views are well known – as are his views of the bond market,” said Neil Wilson, investor strategist at Saxo UK.
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