UK borrowing costs rose to levels not seen since the 2008 financial crisis, while the pound faltered, as investors raised bets that Andy Burnham could succeed Sir Keir Starmer and usher in a shift toward looser fiscal policy, according to market data verified on May 16, 2026.
Traders sold government bonds, pushing yields on 10-year gilts above 5.5%, a level last seen during the 2008 financial crisis. The pound fell 1.2% against the dollar to $1.24, its lowest in six months. The moves followed reports that Burnham, the Labour mayor of Greater Manchester, is considering a leadership bid if Starmer steps down.
Burnham, seen as more left-leaning than Starmer, has advocated for higher public spending and nationalization of key industries. Analysts at Goldman Sachs said in a note that a Burnham leadership could lead to a 'significant repricing' of UK assets, citing his past support for fiscal expansion.
The Bank of England declined to comment on the market moves. A spokesperson for Burnham said he is 'focused on his role as mayor' and has not made any decision about a leadership run. Starmer's office did not respond to requests for comment.
The yield on 10-year gilts closed at 5.52% on May 15, up from 5.1% a week earlier, according to data from Bloomberg. The FTSE 100 fell 0.8% on the day, led by losses in banking and utility stocks.
