UK Gilts Slump as Burnham Path to Challenge Starmer Raises Fiscal Risk

UK gilts sold off May 15, 2026, after Manchester Mayor Andy Burnham said he plans to run for Parliament, creating a possible path to challenge Prime Minister Keir Starmer and raising investor concerns over looser fiscal policy. The 10-year gilt yield rose as much as 13 basis points to 5.12%, on track for its biggest weekly increase since March. The pound fell 0.4% to $1.3354 and was set for its worst week against the dollar since 2024. Thirty-year gilt yields stood at 5.77%, with some investors saying levels above 6% would be needed to attract buyers. Bond traders view Starmer and Chancellor Rachel Reeves as more committed to fiscal restraint than potential replacements. Burnham has floated proposals including lower income taxes and possible borrowing carve-outs for defense spending, though he has said Labour’s budget constraints would remain. The gilt decline was also amplified by rising energy prices tied to the Middle East war, which has revived UK inflation concerns and shifted Bank of England rate pricing toward hikes.