Maelle Quillevere
The fallout from recent cabinet resignations is still rippling through Westminster, but the past few days have brought a clearer sense of direction. While Keir Starmer remains in post as prime minister, a more defined pathway toward a leadership contest is taking shape, even if no one has made a decisive move yet. The key constraint has been Andy Burnham: None of the main frontrunners already in Parliament look willing to move without him, given his position as the likely “soft left” champion. That just got a step closer. The National Executive Committee’s approval for Burnham to stand in the Makerfield by-election has opened a route back to Westminster, with a vote set for 18 June. His victory is not a given—this is a constituency where Reform UK performed very strongly in recent local elections—but if he does return, a leadership challenge becomes almost inevitable. At that point, a contest could quickly take shape between Burnham, centrist Wes Streeting, outsider Al Carns, and other leftwingers such as Angela Rayner or Ed Miliband. In reality, the campaign already feels under way. Streeting has set out a clear line on Europe, describing Brexit as a “catastrophic mistake” and arguing that Britain should ultimately rejoin the EU. The timing looks deliberate, drawing a contrast with Burnham. Despite previously saying he would like the UK back in the EU within his lifetime, Burnham is now striking a more cautious note as he campaigns in a heavily “Leave” constituency, stressing that he is “not advocating” rejoining in the near term and that the 2016 vote must be respected. And so here we are, nearly a decade on, and British politics is once again circling back to Brexit. This mostly reflects a shift in public opinion since 2016. Polling now consistently shows a majority of Britons would support rejoining the EU, while an even larger share favour closer alignment without full membership, the stance closest to current government policy. With that in mind, the gaps between the main players are narrower than the rhetoric suggests. Neither Streeting nor Burnham are advocating rejoining in the near term, and Labour’s broader stance remains cautious: improving ties and deepening cooperation, but stopping short of any commitment to rejoin or re-enter the single market or customs union. As for whether rejoining is a realistic prospect, the answer remains that it is, at best, a long-term project. Even if there were political will, the process would be complex and lengthy, requiring unanimous agreement from EU member states and extensive negotiations across multiple policy areas. That alone would take years. On top of that, the terms are unlikely to be as favourable as they once were: previous opt-outs may not be available, and deeper integration could be required. The more likely path is far more incremental. Whoever leads Labour, the UK is likely to continue moving toward closer alignment with the EU— economically, regulatory-wise, and in areas like defence and security— without formally rejoining. Closer alignment looks increasingly inevitable, driven by economic and geopolitical realities, but rejoining remains a more distant and uncertain prospect. Just like leaving didn’t fix the UK’s problems, rejoining wouldn’t magically fix them either. There is also a clear risk that some of that progress could still be challenged or reversed by a potential Reform UK government in the future. From our perspective, the recent rhetoric around Brexit does little to change the underlying outlook for the UK economy or assets. Near-term volatility is more likely to be driven by other factors, most notably the domestic fiscal trajectory and external developments such as tensions in the Middle East. So, our message remains unchanged: Portfolios should remain well diversified and positioned to lock in yields in quality bonds.
