U.K. Prime Minister Keir Starmer announced Monday he'd step down , opening the door for Britain's seventh leader in 10 years. The process to succeed him as Labour Party leader and prime minister will see a successor take the helm by September 1 at the latest, and with a new administration comes a new set of economic and fiscal policies for markets to digest. Here is what investors should know while the U.K. searches for its next leader. Andy Burnham is the favorite to succeed Starmer. The mayor of Greater Manchester won a seat in Britain's parliament in a special election last week, making him eligible for the leadership. On Monday morning, former health secretary Wes Streeting, who had been a potential rival for the premiership, endorsed Burnham, boosting the chances that he will run unopposed, which would significantly shorten the process. Burnham left parliament in 2017 to become Manchester mayor, after serving in previous Labour governments and challenging for the party leadership in 2015. The prominence the mayoralty gave him, and his separation from the intrigues of parliament, earned Burnham the nickname the "king of the north." He is viewed by onlookers as being to the left of Starmer, and previous comments around fiscal spending had unsettled investors. "We've got to get beyond this thing of being in hock to the bond market," he said in an interview last September, which sparked a sell-off in U.K. government bonds, with traders even then regarding him as a potential future prime minister. He later walked back the statement. "I have never said you can just ignore the bond markets," he told ITV News in May. Writing for CNBC in May, Ian King recalled interviewing Burnham and broke down his "Manchesterism" style of economic management. Freeing government spending from the constraints of the bond market may prove harder than Burnham anticipated, particularly as the U.K.'s fiscal picture continues to worsen. Yields of U.K. bonds, known as gilts, have spiked at signs that the government may spend more. If Burnham becomes prime minister, he will inherit the same cash-strapped administration, limiting his capacity for major outlays. Yield movements may instead focus on the manner of Starmer's departure, rather than the policies of the successor, April LaRusse, head of investment specialists at Insight Investment, wrote in a note. "More recently, the gilt market seems to be expecting a more pragmatic approach to changes in government policy," she said. "We expect the market focus will now be on who may be chosen for key cabinet positions, with the gilt market most interested in the Chancellor and the potential timing of the next Budget." how GBP/USD has fared over 5 years. The British pound is unlikely to be moved by Burnham's move towards 10 Downing Street because it was "well anticipated and largely priced," according to Convera. "A clearly defined transition would likely be seen as orderly," Antonio Ruggiero, FX strategist at Convera, wrote in a note. "The downside risk lies in a more chaotic path....
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