Bond markets are on alert as fresh reports have suggested that Manchester mayor Andy Burnham and health secretary Wes Streeting are preparing leadership bids. City bank and analysts at the likes of Deutsche Bank and Jefferies have flagged the risks of a change in leadership and the potential for looser
Mauricio Alencar
Saturday 02 May 2026 9:42 am
Bond markets are on alert as fresh reports have suggested that Manchester mayor Andy Burnham and health secretary Wes Streeting are preparing leadership bids.
City bank and analysts at the likes of Deutsche Bank and Jefferies have flagged the risks of a change in leadership and the potential for looser fiscal rules.
Deutsche Bank’s Sanjay Raja pointed out the risk premium on gilts, influencing the additional costs to the government in debt payments due to concerns over fiscal stability, had increased again.
He said some reports suggesting there were efforts from the soft-left wings of the Labour Party to introduce welfare reforms could be seen as positive, however.
Investec analysts said both bond markets and pricing for the pound sterling could be swung by stabs at the leadership from left-leaning candidates.
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Jefferies meanwhile put out a note suggesting the upcoming local elections were an “unusually important” event for markets and judgments on fiscal policy.
Analysts have warned that Bunham’s comments about the government being “in hock to the bond markets” and suggestion he would introduce a carve-out in fiscal rules for extra defence spending would make him a threat to the current gilt position.
Burnham versus the bond markets and Labour NEC
A number of reports have suggested that both Streeting and Burnham are looking for ways to launch a leadership bid against Starmer.
Read more Badenoch claims Reeves will be ousted as traders warn on Labour’s turn to left
Burnham is considering making a return to Westminster “within weeks”, according to The Guardian, which could pose a threat to Sir Keir Starmer’s premiership.
Burnham was earlier this year blocked by Labour’s ruling National Executive Committee (NEC) from standing in the Gorton and Denton by-election, after the previous MP Andrew Gwynne stood down.
The NEC cited worries about the costs of running a new Manchester mayoral elections and fears of an election defeat.
Green Party candidate Hannah Spencer eventually won the by-election, with Labour coming in third.
Burnham is reported to be lining up an “impressive” candidate to replace him as mayor, whom The Guardian said was not a sitting MP.
Constituencies across Merseyside and Greater Manchester are reportedly among those where MPs are prepared to stand aside for Mr Burnham.
In separate reports by The Telegraph and The Spectator, Streeting has reportedly got the backing of more than 81 MPs – the minimum required for a leadership bid – to challenge Starmer.
Streeting attempted to ease speculation on an MPs group chat by writing in the message: “There is currently an industry in fishing expeditions by lobby journalists at the moment. Don’t feed it. It undermines all of us fighting elections locally.”
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