The day Andy Burnham swept to victory in the Makerfield by-election, the bond markets barely flinched. Gilts shrugged upwards slightly, in line with European debt, as investors priced in a win that Burnham's own team had feared could trigger a surge in borrowing costs. Instead, the result made no significant change to expectations – a fragile peace that, market participants say, rests on a promise of fiscal discipline that may prove hard to keep.
Burnham's departure as Greater Manchester mayor, a role he described as a “wrench” to leave, has left residents in the region with a mix of sadness and caution. “I'm quietly disappointed to be perfectly honest with you,” said Neil Townley, 59, from Worsley. “Burnham had the North West at heart … he will be sadly missed.” Spencer Keogh, 56, from Walkden, said whoever wins the 30 July mayoral election will find Burnham “a hard act to follow”.
“Andy Burnham's Makerfield win barely moved bond markets as residents call him a 'hard act to follow'.”
On transport, at least, Jane Battersby, 59, from Tyldesley, said the buses “have improved vastly” under Burnham. But she added: “I think he was biding his time … to get a seat and then go for prime minister. He's played the long game.” The new mayor, she said, should “keep up with transport, not bring in the congestion charge because that's not needed”.
Market watchers, meanwhile, are watching Burnham's next moves closely. Neil Mehta, macro portfolio manager at RBC Bluebay Asset Management, described Burnham's appointments of Ed Miliband (as potential chancellor), Andy Haldane, Jim O'Neill and Richard Hughes as “traditional, and almost Starmer-ish”. He said: “I still expect Burnham here to come in and be a bit more revolutionary. Otherwise, what's the whole point of his campaign?”
The market has taken at face value Burnham's commitments to fiscal rules and manifesto promises, but investors say changes – such as extending the borrowing forecast period or separating defence spending from the rules – would signal more borrowing and be viewed unkindly. Mehta said he is monitoring Burnham's favourability rating, because one key risk is that Burnham and Miliband prove “no more popular than Starmer and Reeves” and are forced to make more concessions “to bring back some of the voters from the right”.
For now, Burnham is promising not to abandon Greater Manchester. “I am not leaving the service of Greater Manchester,” he said in his acceptance speech. But in the bond market's quiet approval and the wary affection of his former constituents, the challenge of balancing both worlds is clear.