23 June 2026: Will Burnham’s Shift on UK Immigration Fix the Economy?

It is hard to imagine that the Kier Starmer who walked triumphantly up Downing Street less than two years ago has been forced to resign, buried under the weight of his own poor judgment, which has allowed the former Mayor of Manchester, Andy Burnham, to go from exile to the cusp of fulfilling his dream of becoming Prime Minister.

It remains to be seen whether any of the current crop of Labour MPs will have the temerity to stand against Burnham, or whether the “King of the North” will be able to take over in Downing Street unopposed.

Former Health Secretary Wes Streeting, who was most people’s favourite to stand in any leadership contest, came out in support of Burnham yesterday, so it can be assumed that he will be given one of the plum roles in the new Cabinet.

It was also hard to read Rachel Reeves’ expression at a photocall in Westminster yesterday, as she was probably contemplating whether she is about to lose her job.

Burnham has already said that he plans to ensure any changes he makes will be done within the confines of Reeves’ fiscal rules.

Several Burnham supporters among those expected to remain, backbenchers have been calling for the new Prime Minister to scrap the triple lock on the state pension, although such a radical move is not being seriously considered, given the likely backlash it would unleash.

This government has lost many friends due to its policies since coming to power less than two years ago, and Burnham is likely to want to build bridges rather than burn them.

Opposition leaders, in particular Reform’s Nigel Farage, have said that Burnham was not even interested in becoming an MP at the time of the last election, so he has played no part in the mandate that led to Labour’s election, and a general election should be held.

Burnham himself called for an election under similar circumstances when Theresa May and then Boris Johnson stood down, but at least they had been MPs and cabinet members.

Until July 16th, at which time nominations for the post have to be submitted, the country will be in a state of paralysis, although Starmer has said that he will stay in situ until his replacement is confirmed.

The pound fell close to its 2026 low as the news that Starmer had resigned hit media outlets. It fell to a low of 1.3181. The sell-off reflects growing concerns that extend beyond politics. Investors are increasingly questioning Britain's fiscal direction, borrowing trajectory, and ability to maintain economic stability amid mounting uncertainty.

Alan Greenspan, the former Federal Reserve chairman who led the US economic boom in the 1990s and was dubbed the "Maestro," passed away yesterday at the age of 100.

Greenspan, who served as Fed chair for more than 18 years from 1987 during Ronald Reagan’s presidency until 2006, just before the global financial crisis, is simultaneously praised for his role as the "world’s economic president" and criticised for fuelling speculative bubbles.

During his tenure, Greenspan worked under four US presidents spanning both major parties: Reagan, George H.W. Bush, Bill Clinton, and George W. Bush. The Wall Street Journal noted, "Greenspan was the most significant economic figure in the post-Cold War era and, as a Central Banker, achieved rare fame."

It would be interesting to see what tribute, if any, the current President pays to Greenspan, given the often “go it alone” features of his Chairmanship.

His status is confirmed by his own catchphrase; he referred to the dotcom bubble in 1999 as the market having “irrational exuberance”, a term that has become synonymous with other bubbles and has been considered in reference to AI currently.

Americans don’t need Kevin Warsh to know that inflation is rising. Gas prices are above $4 per gallon amid the ongoing conflict in the Middle East and the closure of the Strait of Hormuz. The release of key price data underscores why policymakers are worried these pressures could spread into the broader economy.

The reports offer a mixed but still uncomfortable picture. The month-to-month rise was softer than expected, but the year-over-year change still points to concern: a 3.8% jump from a year earlier, the fastest pace since 2021, and a core index that excludes food and energy up 3.3%.

The latest PCE data will be published later this week, with the headline number expected to have fallen to 3.4%, although the core is expected to be unchanged.

New Fed Chairman Kevin Warsh has made it clear to markets that he will not comment on individual data releases, but several of his colleagues, including Austan Goolsbee, John Williams and Christopher Waller, have speeches scheduled for Thursday.

The CME FedWatch tool expects the Fed to raise rates, most likely in October, as inflation remains well above the Central Bank’s optimal level of 2%.

The dollar index continued its record-breaking run yesterday, rising to a high of 101.08 and closing at 101.00. This was its highest close since May 2025.

The European Central Bank’s estimate of a neutral interest rate, which neither stimulates nor slows growth, is not used as an explicit goalpost by policymakers when setting interest rates, ECB President Christine Lagarde said yesterday.

ECB chief economist Philip Lane earlier said the neutral rate is between 1.75% and 2.50%, slightly higher than previously thought, prompting some ECB watchers to suggest the ECB could still raise its 2.25% deposit rate once more without leaving the neutral range.

Lagarde went on to dampen market expectations, telling reporters that the ECB does not yet need a more forceful policy response to the war in the Middle East. She argued that inflation expectations remain contained and that price growth is still expected to return to target over the medium term. Her comments signalled that officials are willing to stay cautious, even as investors continue to price in another rate increase this year.

The ECB must watch for any knock-on impact on wages from higher oil and commodity prices resulting from the Middle East conflict, Governing Council member José Luis Escrivá said.

He said the most relevant observation at the ECB’s latest monetary policy meeting earlier this month was the pass-through to prices where energy is a key input, such as transport-related services.

“We must be vigilant that there aren’t any what we call second-round effects on wages, which will depend on how persistent inflation proves to be,” he said in an interview with a Spanish newspaper on Monday.

Consumer sentiment in the Eurozone edged up this month, according to a monthly indicator, continuing its tentative recovery from a three-year low in April following the outbreak of the conflict in the Middle East.

The European Commission’s flash consumer-confidence indicator for the eurozone rose to minus 17.7 in June from minus 19 in May. Economists polled by The Wall Street Journal forecast a slight rise to minus 17.4.

The increase likely reflects easing energy prices over the past month, as well as cooling tensions in the Middle East. Respondents were surveyed from June 1-19, overlapping with the announcement of a U.S.-Iran agreement to halt military action.

“Consumer confidence improved again in June, but the mood among households is still very gloomy,” said Jack Allen-Reynolds, Deputy Chief Eurozone Economist at Capital Economics.

Consumer spending growth is likely to be very weak in the second quarter of the year, before staging a gradual recovery in the third as real incomes begin to recover, he said in a note.

The Euro continues to suffer as the dollar index makes new highs. Yesterday, it fell to a low of 1.1419 and closed at 1.1427.

Have a great day!