Published by Global Banking & Finance Review®
Posted on January 22, 2026
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleUK bond yields rose sharply following reports of Andy Burnham's potential return to parliament, impacting financial markets.
By Andy Bruce
MANCHESTER, England, Jan 22 (Reuters) - British government borrowing costs rose briefly and sterling fell on Thursday after a report in The Times about a possible route back to parliament for Greater Manchester Mayor Andy Burnham, who is considered a challenger to Prime Minister Keir Starmer.
The Times said Andrew Gwynne, the member of parliament for the constituency of Gorton and Denton, was expected to make an announcement later on Thursday that he will stand down, creating a vacancy in parliament that Burnham could contest.
Burnham told Reuters in an interview this week that his vision for Britain's economy should reassure bond investors. Last year, he said Britain's government should not be "in hock" to the bond market.
But the 10-year gilt yield rose to its highest since January 6 at 4.512% at 1143 GMT, up 5 basis points on the day, after the report, while yields on other governments' bonds were flat.
It fell back to 4.45%, flat on the day, at 1236 GMT.
Sterling weakened by about a third of a cent against the U.S. dollar and gilt futures dropped by around 60 ticks and only partially recovered their losses later.
Starmer's Labour Party is faring badly in opinion polls and faces a test in local elections in May, leading to speculation about a leadership challenge in the coming months.
Burnham - who was briefly Britain's deputy finance minister under Gordon Brown's Labour government in the 2000s - would not automatically be selected as the candidate for any Labour vacancy in parliament.
If he put his name forward, he would need approval from the party's governing body which includes elected lawmakers, trade union representatives and local-level Labour officials.
Any Labour candidate may well lose the by-election. A More in Common survey published this month, which included constituency level projections based on polling of more than 16,000 Britons, estimated that Nigel Farage's Reform UK was on 30% in Gordon and Denton, ahead of Labour on 28%.
CONTROLLING PUBLIC FINANCES
Gwynne was sacked as a minister and suspended from Labour by Starmer in February 2025 over WhatsApp messages insulting constituents and other members of parliament. Gwynne has sat as an independent lawmaker since then.
Burnham - the mayor of Manchester in northern England since 2017 - told Reuters on Tuesday that restoring public control over key services would lower long-term costs for the state while past deregulation, privatisation, austerity and Brexit had weakened control over public finances.
Finance minister Rachel Reeves said earlier this week that investors did not need to worry about the prospect of Starmer being replaced in Downing Street.
"The parliamentary Labour Party, the cabinet, want the prime minister to succeed," she said at an event hosted by Bloomberg in Davos on Tuesday.
"Even if someone did have the stupid idea of challenging the prime minister, it is incredibly difficult to do so, and I have every confidence that Keir will continue to be Prime Minister all through this term," Reeves said.
(Reporting by Andy Bruce; editing by William Schomberg, David Milliken and Susan Fenton)
A bond yield is the return an investor can expect to earn on a bond, expressed as a percentage of its face value. It reflects the bond's interest payments and any capital gains or losses.
Sterling is the official currency of the United Kingdom, often referred to as the British pound. It is abbreviated as GBP and is one of the world's major currencies.
An interest rate is the amount charged by lenders to borrowers for the use of money, typically expressed as a percentage of the principal amount borrowed.
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