By Elizabeth Piper and Kate Holton
LONDON, June 22 (Reuters) - Prime Minister Keir Starmer could on Monday set out a timetable for his departure and usher in an orderly transfer of power to rival Andy Burnham, paving the way for Britain's seventh leader in a decade.
Less than two years after Starmer won a landslide election victory that promised to end Britain's chaotic politics, one source said he had spent the weekend considering whether to step aside or fight a leadership contest.
"Keir likes to
think about things," said the source on condition of anonymity.
PRESSURE HAD BEEN BUILDING FOR MONTHS
The threat to Starmer, which has been building for months, increased sharply on Friday when Burnham, the Greater Manchester mayor, decisively won a parliamentary election to return to Westminster, beating a candidate from Nigel Farage's Reform UK party which has led national opinion polls for more than a year.
That victory gave hope to Labour lawmakers that Burnham, a career politician known for his communication skills, could transform the fortunes of a party that has lost support under Starmer, whose popularity ratings have sunk to the lowest for any British leader.
But the widely expected change of leader is not without risk.
Beyond saying that the country needs fundamental change and to bring down the cost of living, Burnham has yet to make clear his approach to foreign affairs, the economy and defence.
Like Starmer he could find he has little room to manoeuvre, hemmed in by bond market investors opposed to any additional borrowing, and confronted by an angry electorate who believe the country is not working properly.
Britain already has the highest borrowing costs in the Group of Seven wealthy nations due to its high debt and interest payments, years of anaemic economic growth, its struggles to cut spending and the need to invest in areas like defence.
Investors spoken to by Reuters were divided over whether Burnham, who said last September that Britain had to get "beyond this thing of being in hock to the bond markets" would respect the need to reassure markets.
He has since said he was misrepresented.
"In our view, a Burnham premiership would inherit a precarious fiscal situation with few tools to deliver meaningful change," economists at Citibank said on Friday.
STARMER HAD PLEDGED TO FIGHT ANY CHALLENGE
Starmer had said on Friday he would stand in any formal Labour leadership contest that sought to replace him.
The former health minister Wes Streeting has also said he has the backing of the 81 Labour lawmakers needed to enter a leadership race, but one senior figure in the party said they believed Streeting could do a deal with Burnham, giving him a senior role if he stayed out of the contest.
While Starmer's team believes his landslide national election win in 2024 gives him the mandate to stay in post until 2029, business minister Peter Kyle said on Sunday the prime minister was reflecting on "the political challenges that he faces in this moment".
Were Starmer to announce a timetable for his departure from a podium in Downing Street on Monday, he would be just the latest leader to do so. Burnham, if he succeeds, would become Britain's seventh prime minister since the Brexit vote to leave the European Union which took place 10 years ago this week.
That level of turnover - the highest in Britain in nearly two centuries - underlines the struggle of maintaining the support of voters angry at successive failures to improve living standards, public services and tackle illegal immigration.
The political advisory group Eurasia said the best outcome could be for Starmer to say he will step down in September, enabling him to attend a UK-European Union reset summit in July and give Burnham time to prepare for government.
(Writing by Kate Holton; additional reporting by David Milliken; editing by Barbara Lewis)
