On Brexit’s 10th birthday, UK’s political churn grows

June 23, 2016 — the date of the Brexit referendum — remains a seismic moment in the UK’s political history. But the roots of the country’s long period of political instability, which claimed its latest prime ministerial victim on Monday, run even deeper.

Keir Starmer’s resignation means he will, remarkably, become the fourth prime minister to leave office in the last four years. His successor will become the seventh premier since the 2016 referendum after David Cameron, Theresa May, Boris Johnson, Liz Truss, Rishi Sunak and Starmer.

The origins of this uncertainty extend back to at least the 2007-2009 financial crisis, an event from which the economy still has not fully recovered. Indeed, one of the defining features of the current UK landscape is that, as of the end of 2023, the country’s real per capita gross domestic product was estimated to be about 28 percent below what the trend growth of 1955 to 2008 would have predicted before the financial crisis.

Starmer will remain prime minister until at least mid-July, when nominations will close for Labour MPs to express an interest in becoming leader. Before he leaves office, he wants to try to enhance his political legacy as premier, including at the upcoming NATO Summit in Turkiye. Before then, Starmer still hopes to announce the new UK Defense Industrial Strategy, outlining billions of pounds of new military spending.

The reason Burnham is favorite to succeed Starmer is that he is the least unpopular high-profile politician in the UK

Andrew Hammond

Former Manchester Mayor Andy Burnham, who won last week’s Makerfield by-election, is the hot favorite. There will be extensive backroom negotiations in the coming days, through which he will seek to persuade other potential leadership candidates, such as former Defense Minister Al Carns, not to stand. Former Health Secretary Wes Streeting and Chief Secretary to the Prime Minister Darren Jones have already ruled themselves out of the running.

The reason Burnham is favorite — possibly unopposed in a “political coronation” — is that he is the least unpopular high-profile politician in the UK. Labour MPs hope that he can boost the party’s political fortunes, with national polls showing the populist Reform UK ahead. Reform is led by Brexiteer Nigel Farage, a key ally of US President Donald Trump.

However, it is not clear that his popularity in northwest England will necessarily extend to other areas of the UK, where Labour will need to win many seats if it is to secure a second term. This includes Scotland and Wales, where nationalist parties the Scottish National Party and Plaid Cymru — which want to see the break-up of the UK — are in power simultaneously for the first time.

Moreover, Burnham would likely become more unpopular after he takes office, with many tough early decisions waiting in the new prime minister’s in-tray. This includes the next steps with the so-called Brexit reset with the EU.

As PM, with a large Labour majority still in the House of Commons, perhaps the key constraint on Burnham may be financial

Andrew Hammond

Burnham has been criticized for his ideological flexibility. He was part of former Prime Minister Tony Blair’s centrist, pro-business government. However, he has declared that if he leads the next Labour government, he wants to bring an end to what he calls “40 years of neoliberalism” in the UK, which implies a leftward political shift.

During his decade as mayor of Manchester, the UK’s fastest growing city region, Burnham promoted a “Manchesterism” philosophy. He claims to have shown it is possible to use public funds effectively, with measures such as bringing buses into public ownership, while reducing crisis spending to turn around the area’s fortunes.

As prime minister, with a large Labour majority still in the House of Commons, perhaps the key constraint on Burnham may be financial. Many market participants already anticipate that the UK government may be entering a period of sustained fiscal loosening amid higher inflation in the post-Iran war period, higher government spending expectations and intensified political uncertainty.

Burnham, for instance, has previously criticized the Starmer government’s economic approach, claiming the country is “in hock to the bond markets.” A government led by him could potentially see the tweaking — if not the wholesale jettisoning — of the current government’s fiscal rules that limit the scope for new borrowing.

This is in a context where the UK’s debt-to-GDP ratio is now at about 95 percent. The UK Office for Budget Responsibility, the fiscal watchdog, estimates that every percentage point rise in yields costs the government an extra £15 billion ($19.7 billion) a year in debt interest by 2030. The key for current Chancellor Rachel Reeves, if she is to meet her goal of a balanced budget by 2029/30, is that she only has £24 billion of fiscal headroom.

Starmer’s resignation has continued the UK’s long period of political instability. And the next prime minister, most likely Burnham, will face similar challenges, with the financial markets watching closely.

• Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.