British Prime Minister Keir Starmer announced on Monday that he would step down as Labor leader and prime minister, ending months of political turmoil and beginning a campaign to replace him.
The announcement comes as pressure mounted on the Prime Minister after Labor suffered a crushing defeat in May’s local elections and amid growing calls for rebellion among members of the Labor Party over his leadership and policy agenda.
The move comes less than two years after Mr Starmer led Labor to one of the largest majorities in the 2024 general election.
Mr Starmer, in a statement outside 10 Downing Street shortly after 9.30am in London, said he would remain in the post until the leadership battle is resolved, which he said would help ensure an orderly handover of power.
Labor’s former mayor of Greater Manchester, Andy Burnham, has won a decisive victory in a June 18 special election, potentially posing a challenge to the party’s leadership and, ultimately, to the UK Prime Minister’s seat.
What Starmer said outside Downing Street
In a short speech, a visibly emotional Mr Starmer said joining No. 10 Downing Street was “the proudest moment of my life”, adding that during his time in office Britain’s reputation around the world had been restored by securing investment and improving workers’ rights.
But Mr Starmer later admitted that Labor colleagues had asked him whether he was the best person to lead the party ahead of the next general election.
“I have heard the response from my party and I respectfully accept that response. I am resigning as leader of the Labor Party.”
UK market reaction
The pound was last trading 0.19% lower against the dollar at $1.3207. The yield on Britain’s 10-year government bond, known as Gilts, was flat early Monday at 4.8452%.
British gold yields soared on Friday following Mr Burnham’s by-election victory. But he has recently been keen to appease markets, distancing himself from previous comments suggesting Britain was “following the bond market”.
GBP/USD.
Callum Pickering, chief economist at Peel Hunt, said the UK borrowed too much and had public debt levels too high, but insisted the UK was not a “fiscal outlier” compared to other G7 countries in this respect.
He said that under Mr Starmer’s leadership, the UK had opened up to the world, struck new trade deals and achieved real GDP growth of 1.5%.
But Mr Pickering said Britain’s borrowing costs remained the highest in the G7 and it remained the G7’s most inflated economy on average for most of the past decade.
“This is what the market is concerned about,” Pickering told CNBC’s “Squawk Box Europe” shortly after Starmer’s announcement. “Markets need to be pricing in what Burnham’s position is now.”
Why Keir Starmer is resigning
Starmer and Chancellor of the Exchequer Rachel Reeves are at loggerheads within the party over grievances over fiscal policy, while welfare reform and the appointment of Peter Mandelson, an associate of the late sex offender Jeffrey Epstein, as ambassador to the United States have further soured relations within the party.
An Ipsos poll released on Friday found that 52% of British people think Starmer should resign as prime minister, five points higher than in May, and 35% think he should remain in office.
7th prime minister in 10 years
Keir Starmer’s resignation is the first in nearly 10 years since the UK voted to leave the European Union. His successor will be Britain’s seventh leader in the same period, underscoring how political and economic turmoil continues to destabilize British politics even after Brexit is complete.
Prime Minister David Cameron campaigned for Remain and resigned after losing the 2016 referendum. His Conservative successor, Prime Minister Theresa May, spent three years rebuilding Britain’s relationship with the EU before stepping down. Boris Johnson followed suit, but was forced to resign in July 2022 after revelations about his handling of misconduct allegations against Conservative party deputy leader Chris Pincher led to a series of ministerial resignations.
Mr Johnson was replaced by Liz Truss, whose unfunded tax cut “mini-Budget” in September 2022 sent gilt yields soaring and caused the pound to fall. She resigned after just 50 days in office. Rishi Sunak then took over and faced a cost-of-living crisis exacerbated by soaring inflation and the war in Ukraine.
Mr Starmer defeated Mr Sunak in the July 2024 general election, returning Labor to power for the first time in 14 years with a landslide victory. However, despite securing a 174-seat majority, Starmer’s government was ultimately weakened by falling opinion polls, infighting within the Labor Party, and growing public dissatisfaction with the party’s inability to deliver growth and cost of living quickly.
What happens next?
Monday’s resignation announcement paves the way for a formal process to select a replacement.
Mr Burnham was endorsed on Monday morning by former health secretary Wes Streeting, a potential rival for the prime minister’s post.
Mr Burnham, who will be sworn in as an MP on Monday, paid tribute to the Prime Minister in a post on X, saying his resignation was the beginning of a transition process. Mr Starmer has said he intends to remain in the post until a new leader is formally chosen by the party, which could happen within weeks unless there is opposition from Mr Burnham.
“It is important that this process occurs in an orderly and responsible manner, and I am coming forward as part of this process,” Burnham wrote.
