Andy Burnham Sworn in as UK Prime Minister... "Ending Political Instability with a New Economic Model"

[Mexico City = Shim Young-jae, Special Correspondent] Andy Burnham, the former Mayor of Greater Manchester, has officially been sworn in as the new Prime Minister of the United Kingdom. Burnham, who becomes the seventh UK Prime Minister in over a decade, presented a ten-year national reform plan that includes immediate measures to reduce the cost of living, decentralization, and strengthening control over public services.

According to Bloomberg on the 20th (local time), Prime Minister Burnham delivered his inaugural speech at 10 Downing Street after receiving a request to form a government from King Charles III at Buckingham Palace. The UK government announced that Burnham has officially taken office as Prime Minister.

"I Will Be the Circuit Breaker for the UK"

In his inaugural speech, Prime Minister Burnham acknowledged that "the public is tired of politics" and admitted that the existing political establishment has not delivered sufficient results. He stated, "I will make this moment a circuit breaker for the UK," pledging to push for the largest political and economic structural changes in the last 40 years.

The core proposals of the new government include reducing the cost of living, restructuring the central government, expanding local government powers, and strengthening public control over essential services.

Burnham plans to start with short-term measures to address the cost of living and restructure the government and economy over the next ten years. He emphasized his commitment to fiscal rules and fulfilling international obligations, including defense, to reassure financial markets and allies.

Bloomberg reported that he delivered a speech for about five minutes without a podium or script to emphasize a more approachable and direct image than usual.

Reducing Living Costs and Expanding Local Powers

During the Labour Party leadership election, Burnham presented decentralization as a key policy.

He plans to establish a Prime Minister's office in Manchester, promote the largest housing construction plan since the war, and expand local government powers over taxes and essential services such as water, energy, and transportation.

Youth unemployment is also highlighted as a major issue. It is estimated that around 1 million young people in the UK are not engaged in employment, education, or training.

Burnham stated that instead of simply cutting welfare spending, he aims to reduce long-term welfare costs by strengthening education reform, employment support, and mental health services for young people.

His first directive after taking office was to address homelessness. The UK Prime Minister's office announced plans to invest £340 million over the next five years to provide 1,200 housing units and support at least 3,000 long-term homeless individuals.

However, there are ongoing concerns about the feasibility of these plans, as Burnham had previously promised to eradicate street homelessness during his tenure as Mayor of Greater Manchester but did not fully achieve this goal.

Tax Cuts Suggested, But Funding is Key

Prime Minister Burnham has also opened the door to potential tax cuts for low-income individuals.

He hinted at the possibility of reviewing the current income tax threshold, which is frozen at £12,570, to increase it again. At the same time, he stated that the Labour Party's pledge not to raise income tax, national insurance contributions, or VAT in the 2024 general election, as well as the "triple lock" system for state pensions, would be maintained.

Achieving fiscal rules, tax cuts, and expanding public service investments simultaneously is seen as the biggest challenge for the new government.

Helen Miller, director of the UK Institute for Fiscal Studies, pointed out that Burnham's plans cannot be realized through mere political will and that policy goals and funding strategies need to be urgently clarified. She analyzed that if a relatively large budget continues to be allocated to the National Health Service, cuts in spending for other government departments may be unavoidable.

UK Government Bond Yields Around 5%... Limited Market Reaction

Financial markets seem to be paying more attention to international oil prices and the appointment of the next Chancellor of the Exchequer than to Burnham's swearing-in.

According to Bloomberg, the yield on UK 10-year government bonds rose by 5 basis points to 5% as of 2:25 PM London time. Separate market data also indicated that yields fluctuated around 4.98% to 5% that day.

Evelyn Gomez-Richie, a strategist at Mizuho International, assessed that Burnham's reaffirmation of compliance with fiscal rules prevented a sharp rise in bond yields.

Market interest is focused on Shabana Mahmood, the Home Secretary, who is mentioned as a potential next Chancellor. Mahmood is considered more financially prudent and market-friendly than Ed Miliband, the Energy Secretary. Bloomberg Economics analyzed that Mahmood's potential appointment as Chancellor would reinforce expectations that the UK government will maintain existing fiscal rules.

Succession of Prime Minister After Starmer's Resignation

Former Prime Minister Keir Starmer resigned, taking responsibility for the poor performance in local elections and prolonged low approval ratings.

Burnham succeeded to the Prime Minister's position after being elected as the leader of the Labour Party and receiving approval from King Charles III. The UK has experienced political instability, with seven changes in Prime Minister over the past decade since 2016.

After losing twice in previous Labour Party leadership elections, Burnham left central politics to serve as Mayor of Greater Manchester. He later increased his national profile by advocating for decentralization, public transport reform, and representing the interests of the northern regions of the UK.

The new government is expected to finalize cabinet appointments and disclose details of the cost of living measures and the ten-year reform plan in the near future.

The market is watching how the Burnham government, which has proposed large-scale housing construction, public service investments, and potential tax cuts, will adjust spending and revenue within limited fiscal capacity, as this will be a key variable for UK asset prices.

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