LONDON (Realist English). The political crisis in the United Kingdom has reached a boiling point. Prime Minister Keir Starmer, according to leading British media, is ready to announce plans to resign as early as Monday, June 22, bowing to pressure from his own party following Andy Burnham’s crushing by‑election victory in Makerfield.
The pound sterling has tumbled to its lowest levels since the start of the year, and markets are bracing for a shift in economic policy.
‘Last Chance’: Burnham Returns to Parliament
Burnham’s victory in the Makerfield by‑election, held on June 18, proved a turning point. The Mayor of Greater Manchester won nearly 55% of the vote, beating Reform UK candidate Robert Kenyon by more than 9,200 votes.
In his victory speech, Burnham said Labour had received a “last chance to change” and that “there will be no second chance.” He promised that Makerfield would not be a “stepping stone” for him, but a “foundation.”
Burnham, who previously served as a minister in the governments of Tony Blair and Gordon Brown, now intends to use his mandate to challenge Starmer for the leadership. Under Labour Party rules, an MP can challenge the leader with the support of at least 81 parliamentary colleagues.
According to Sky News, 96 MPs have already publicly called on Starmer to step down.
Starmer Surrenders: Ultimatum and Transition Period
Starmer, who had previously vowed “not to go” and fight for his position, has agreed to resign under pressure from his cabinet. Among those who urged the prime minister to step down are Foreign Secretary Yvette Cooper, Home Secretary Shabana Mahmood and Transport Secretary Heidi Alexander.
Business Secretary Peter Kyle said Starmer was reflecting on the “political realities” and would do what was “in the country’s interest.”
Starmer is expected to announce a timetable for his resignation, remaining in office until the party conference at the end of September to ensure an “orderly transition” to a new leader. According to The Guardian, he is already working on his farewell speech.
At the same time, some Burnham supporters consider the three‑month transition too slow and fear it will paralyse the government.
Pound Plunges to Yearly Lows
Political chaos was immediately reflected in financial markets. On Monday, June 22, the pound sterling fell 0.4% to $1.3181, approaching its yearly low of $1.3159 set in March. Since pressure on Starmer began in February, the pound has lost about 3%. At one point, the exchange rate dipped to $1.32055.
Analysts warn of further weakness. Bloomberg predicts a move towards $1.30 – the lows of November last year. Investors fear that Burnham, who is seen as more left‑wing than Starmer, may revise strict fiscal rules, leading to higher borrowing and a sell‑off in the bond market. The yield on 10‑year British government bonds is already approaching 4.85% – highs not seen since the 2008 financial crisis.
The key question for markets is whom Burnham will appoint as Chancellor of the Exchequer and whether he will adhere to the fiscal rules set by Rachel Reeves. “A relaxation of fiscal rules would likely be poorly received by the UK bond market and put pressure on the pound,” warn strategists at Commonwealth Bank of Australia.
