Burnham takes UK premiership as gilt prices fall on borrowing plans

Andy Burnham took office as Britain's new prime minister after Labour MPs ousted Keir Starmer, marking the country's sixth change of leader in a decade. In a speech outside No 10, the new premier acknowledged public fatigue with politics and pledged to "bring back hope" by reversing the economic damage of the 1980s.

For European investors, the immediate focus is Burnham's fiscal stance. He stated he would seek "any flexibility" within existing fiscal rules to borrow billions for infrastructure. UK 10-year gilt prices dropped in response to these comments, reflecting lingering market sensitivity to British debt risks.

He moved to calm those fears by appointing John Healey as chancellor. The former defence secretary, whose resignation helped push Starmer from power, is regarded as a safe pair of hands with previous Treasury experience. Healey must now balance Burnham's planned cost-of-living interventions—expected to include cuts to energy bills and bus fares—with a commitment to raise military spending to 3% by 2030, potentially using defence bonds.

On the international stage, Burnham moved quickly to establish his diplomatic footing. His first call as leader was to Donald Trump, whom he invited to Manchester for next year’s G20 summit. Trump later wrote that they had a "very good conversation" covering Iran, the US-UK military alliance and trade. Burnham also called European Commission president Ursula von der Leyen and Ukraine’s Volodymyr Zelenskyy.

The cabinet overhaul saw Ed Miliband moved to foreign secretary and Yvette Cooper shifted to health to oversee social care reform. Starmer loyalists Rachel Reeves and David Lammy were sacked, while Angela Rayner returned as housing secretary. Burnham has promised a "circuit breaker" for Britain's political instability, but his immediate test will be proving to markets and allies that his government can deliver economic prudence alongside its ambitious domestic agenda.