Having already had six Prime Ministers in 10 years and a seventh on the horizon, the markets have become largely immune to the UK’s political comings and goings.
Yesterday was no different with the markets shrugging off the resignation statement by Keir Starmer and the rapid positioning of Andy Burnham as his likely successor, most probably without a leadership contest.

In the immediate aftermath of the Prime Minister’s announcement that he was stepping down, sterling rose 0.3% against the dollar to $1.32, while the FTSE 100 ended the day up 75 points at 10,437.85.

The picture was slightly different just a few days ago, with a brief upward spike in bond yields, when it first appeared that Mr Starmer was on the verge of being forced out by his own MPs and the likelihood of a full-blown leadership contest that could last until the autumn.

There were also the comments from Mr Burnham over recent months that Britain is “too in hock to the bond markets” with ensuing concerns that as Prime Minister he may be inclined to tear up the fiscal rule book. The markets didn’t like this, forcing a climbdown from Mr Burnham.

Mr Burnham’s convincing win in the Makerfield by-election last Thursday provided further assurances for the markets, with the resounding result giving the so-called ‘King of the North’ the tidal wave of momentum that carried him all the way to Westminster and the now strong possibility of his coronation as leader and the UK’s next Prime Minister.

They say timing is everything and this may just prove the case for Mr Burnham if he is successful in his bid to become Prime Minister over the coming weeks.

If the tentative peace in the Middle East holds and the Strait of Hormuz fully reopens, Mr Burnham and his Government will benefit from the resulting fall in the price of oil which, in turn, will be good for inflation and could result in a reduction in interest rates.

A Burnham-led Government is also likely to use any initial honeymoon period to boost transport and infrastructure projects and, potentially, signal an intent to tackle the soaring welfare bill. It is also likely that the conversation around scrapping the pension triple lock will intensify ahead of the November Budget.

The markets will likely be receptive to the positivity of a new Prime Minister, as long as the policy programme remains laser focussed on the urgent need for greater growth in the

UK economy, something that continues to be the greatest challenge and prize for any Government.

Finally, a brief update for clients, to let you know that our review of portfolios is now largely completed. I would like to thank you for your assistance with this matter and would also like to thank our team for their hard work making the various recommended adjustments over recent weeks.

As ever, please do get in touch if you would like to talk through anything with a member of the team.