Can Andy Burnham boost the UK economy?
Much is yet to be determined but, based on what has been reported so far, Andy Burnham’s political agenda and policies for stimulating economic growth would appear to revolve around four main areas:
- Devolution of power from central government to local governments.
- An increase in the overall power of the government and greater control of public services.
- An attempt to ‘reindustrialise’, supporting a range of manufacturing and service industries across regions, complemented by education reforms.
- A program of regeneration, centering on council house building.
Some of his policies will of course focus more on social, rather than economic, benefits however the question is whether his agenda (as set out so far) will be sufficient to significantly boost the UK economy and potentially alter the macro – or micro – economic outlook.
History is not on his side, as there is very little evidence to show that political leaders in the developed world can significantly influence their economies in the shorter term. In the UK, for example, going back to the 1950s only two prime ministers have presided over a period of growth which is superior to that of the previous incumbent.
Average UK economic growth under different governments
Source: LSEG data and analytics, July 2026.
Headwinds
As is widely known, the UK’s fiscal position remains weak and the new prime minister will have limited room for manoeuvre within the existing rules, particularly if he abides by Labour’s manifesto promise to not raise VAT, income tax or National Insurance. Gilt markets would also likely push back if he significantly increased borrowing (the current additional ‘acceptable limit’ is thought to be around £15bn).
With the next general election set for August 2029, and Labour currently lagging in the polls, he also potentially has very limited time to effect change which, as ever, doesn’t sit comfortably with potentially very long-term projects such as house building.
In addition to these headwinds, it is not immediately clear how much, or in some cases if, these policies will stimulate economic growth. For example, looking globally, the evidence for devolution of power stimulating growth is (at best) mixed, while the primary benefits of potentially improved public services do not tend to be economic.
To date, Andy Burnham has also said little on his plans regarding the private sector, however some significant support would also seem essential in this area if the UK’s key issues of low investment, low savings and low productivity are to be fully addressed.
Our current view
Overall, while it is very early days and there is no doubt much still to be revealed by the new prime minister when he is appointed, we do not expect his policies to fundamentally change the economic backdrop in the shorter term.
This does not mean that the UK economy will not grow, but rather that any growth will more likely be driven by the global economic cycle or more global influences (such as the impact of AI). Our view, therefore, remains that the UK economy will continue to lag at a global level, and particularly against the US and Asia.
As we have frequently said, however, the UK stockmarket is global in nature and contains some world class companies with strong earnings growth, some of which are attractively valued versus global peers. As such, while our overall allocation is historically low, we continue to believe that some selective UK exposure remains appropriate.
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