U.K. Prime Minister Keir Starmer announced Monday that he will stand down as Labour leader and prime minster, ending months of political turmoil and opening a contest to replace him.
The announcement follows mounting pressure on the prime minister after Labour
suffered heavy losses in local elections in May and faced an increasingly vocal rebellion from his own lawmakers over his leadership and policy agenda.
The move comes less than two years after Starmer led Labour to one of its largest parliamentary majorities in the 2024 general election.
In a statement outside 10 Downing Street shortly after 9:30 a.m. in London, Starmer said he would remain in post until any leadership contest is completed, which he said would help ensure an orderly handover of power.
In a short speech, a visibly emotional Starmer said that entering 10 Downing Street had been the "proudest moment of my life," adding that, under his tenure, Britain's reputation in the world had been restored, with investment secured and improvements in workers' rights delivered.
However, Starmer conceded that Labour colleagues had since been asking whether he was best placed to lead the party into the next general election.
"I have heard the answer from my parliamentary party. I accept that answer with good grace. I will resign as leader of the Labour Party."
Labour's former Greater Manchester mayor, Andy Burnham,
won a decisive victory in a special election on June 18, potentially setting up a challenge for the party's leadership and, by extension, the U.K.'s premiership.
Starmer and Finance Minister Rachel Reeves have been battling discontent over fiscal policy within their own ranks, while welfare reforms and the
appointment of Peter Mandelson — an associate of the late sex offender Jeffrey Epstein — as U.S. ambassador, further damaged intra-party relations.
An Ipsos poll published on Friday suggested that
52% of the British public think Starmer should stand down as prime minister, five percentage points higher than in May, while 35% think he should continue.
U.K. gilt yields
jumped on Friday following Burnham's by-election win. However, he has been keen to placate markets lately, distancing himself from previous statements in which he suggested the U.K. was "in hock to the bond markets."
Kallum Pickering, chief economist at Peel Hunt, said that the U.K. is borrowing too much and that its public debt levels are too high, but he stressed that the country is not a "fiscal outlier" in this regard relative to other G7 countries.
He said that, under Starmer's leadership, the U.K. had opened itself up to the world, signing new trade deals and delivering 1.5% real GDP growth.
However, Pickering said the U.K. still has the highest borrowing costs in the G7, and has remained the most inflationary economy in the G7 on average for most of the past 10 years.
"This is the thing that the market is concerned about," Pickering told CNBC's "Squawk Box Europe" shortly after Starmer's announcement. "The market now has to price in what a Burnham premiership looks like."
<small>Source: CNBC</small>
