U.K. Prime Minister Keir Starmer on Monday confirmed he will step down as Labour leader and prime minister, bringing months of political turbulence to a close and paving the way for a leadership succession race.
The move comes after growing pressure on the prime minister, following Labour’s significant setbacks in the May local elections and an escalating internal revolt from party lawmakers over his leadership and policy direction.
The decision comes less than two years after Starmer secured one of Labour’s biggest parliamentary majorities in the 2024 general election.
In a statement delivered outside 10 Downing Street shortly after 9:30 a.m. in London, Starmer said he would continue in office until the leadership contest is concluded, explaining that this would allow for a smooth and orderly transfer of power.
Andy Burnham, the former Labour mayor of Greater Manchester, secured a clear win in a by-election held on June 18, a result that could position him as a contender for the party’s leadership and, ultimately, the UK prime ministership.
In a brief, emotional address, Starmer said that stepping into 10 Downing Street had been the “proudest moment of my life.” He added that during his time in office, Britain’s standing on the global stage had been rebuilt, with new investment secured and changes made to strengthen workers’ rights.
However, Starmer acknowledged that some within the Labour Party had begun questioning whether he was the right person to lead them 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.”
The pound was last trading 0.19% lower against the U.S. dollar at $1.3207, while the yield on 10-year UK government bonds (gilts) was unchanged early on Monday at 4.8452%.
UK gilt yields rose sharply on Friday after Burnham’s by-election victory, although he has recently sought to reassure financial markets, stepping back from earlier remarks that suggested the UK was “in hock to the bond markets.”
Kallum Pickering, chief economist at Peel Hunt, said the UK is taking on excessive borrowing and carrying high public debt, while noting that it is not a “fiscal outlier” compared with other G7 economies.
He added that under Starmer’s leadership, the UK had become more open to global markets, securing new trade agreements and recording 1.5% real GDP growth.
But, Pickering noted that the UK continues to have the highest borrowing costs in the G7 and has also, on average over the past decade, been the most inflation-prone economy among the group.
“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.”
Starmer and Finance Minister Rachel Reeves have been facing growing internal pressure over fiscal policy, as tensions within Labour intensify. The strain has also been compounded by welfare reform debates and controversy surrounding the appointment of Peter Mandelson — an associate of the late convicted sex offender Jeffrey Epstein — as U.S. ambassador, which has further unsettled party relations.
A poll released by Ipsos on Friday indicated that 52% of Britons believe Starmer should step down as prime minister, an increase of five percentage points since May, while 35% said he should remain in office.
Keir Starmer’s resignation comes nearly a decade after the UK’s vote to leave the European Union. His successor will become Britain’s seventh prime minister in that timeframe, highlighting the continued political and economic instability that has persisted long after the Brexit process ended.
David Cameron stepped down after leading the Remain campaign in the 2016 referendum, which ended in defeat. He was succeeded by Theresa May, who spent three years attempting to renegotiate the UK’s relationship with the European Union before resigning. Boris Johnson then took office, but left in July 2022 following a series of scandals, including controversy over his handling of misconduct allegations involving Conservative deputy chief whip Chris Pincher, which ultimately led to mass ministerial resignations.
