Gilts Slump in Anticipation of Burnham Challenge to Starmer

UK government bonds tumbled after Manchester Mayor Andy Burnham secured a pathway to potentially challenge Keir Starmer as prime minister, threatening political instability that investors fear could result in more expansive fiscal policy.

The yield on 30-year gilts, the most sensitive maturity to political risk, surged as much as 20 basis points to 5.86%, the highest since 1998. Concerns about high energy costs and inflation also contributed to the move. Burnham’s announcement that he intends to run for Parliament — a prerequisite to challenge Starmer — put the pound on track for its worst week since 2024 against the dollar.