FTI Consulting UK Public Affairs Snapshot – What Might “Manchesterism” Mean for Financial Services?

As challengers fade away and Andy Burnham edges closer towards Downing Street, the City of London is paying close attention. When Keir Starmer came to power, it was after a sustained charm-offensive that had reassured the financial services sector of his commitment to fiscal responsibility. Burnham’s political economy is more opaque. In the absence of clearly defined policy positions, attention is turning towards the nebulous concept of “Manchesterism” – shorthand for more public control, radical devolution, and a public investment-led growth model. For the City, it is a doctrine that raises questions around borrowing costs, approaches to wealth and capital, and the long-term role of private finance in public infrastructure. 

At its core, “Manchesterism” advocates for greater public control over utilities and radical devolution. Burnham has pledged to provide “good growth in every postcode”, arguing that “regions and nations are not meeting their potential and Londoners are left with an overheated economy”. For financial services, this signals a renewed focus on investment that delivers tangible outcomes in the real economy. While Burnham has confirmed his commitment to the outgoing Government’s existing fiscal rules, his early speeches also suggest an openness to more “creative” approaches to enabling borrowing to fund infrastructure investment. In that context, investors with compelling stories to tell on local infrastructure and regional development are likely to be well received. 

As Greater Manchester Mayor, financial services were not part of Burnham’s remit, and the sector has been largely absent from his leadership pitch. Where Starmer and Reeves entered government focused on fiscal discipline, Burnham will have fewer qualms in making the argument that wealth and accumulated assets should contribute more. But there is a deeper question here. Starmer and Reeves undoubtedly saw the City as an economic driver; Burnham, in contrast, has railed against “40 years of neoliberalism”, in a diagnosis which aligns the beginning of Britain’s economic and social ills with the 1986 “Big Bang” and strengthening of the City of London as a global financial hub.   

Indeed, if the recent policy report on “Manchesterism” from the Burnham-aligned political network Mainstream is to be taken as a blueprint, it would set off alarm bells in the City. It criticises the cost of private capital relative to public investment and the complexity of private financing structures, while advocating for a third pillar of the economy which invests public money into public assets to dodge the “privatisation premium”. More specifically, it criticises pension funds with short-term horizons for investing in utilities and the private equity model of ownership for leaving the state as a backstop.  

While that is just one policy paper, Burnham is clearly concerned about the role of private finance in extracting returns from essential infrastructure. He has already signalled an openness to nationalising water companies – seen as the most egregious example of “extraction” in the utilities sector – while committing to “greater public control” of housing, energy, and transport. It appears that wholesale nationalisation is unlikely, but a Burnham government would likely introduce new political risk in certain asset classes.  

However, despite Burnham’s previous criticism of the UK being “in hock” to the bond markets, he is an astute politician who is aware of the feedback loop between financial markets and political choices. The gilt market reaction to Liz Truss’ mini-Budget remains a cautionary tale, and the implications of missteps will not be lost on Burnham. In seeking the advice of Andy Haldane, Jim O’Neill and Richard Hughes as his informal economic advisers, he is bringing together significant combined wisdom on public investment and fiscal policy. Turning to a former Conservative Minister and leaders from the Bank of England and Office for Budget Responsibility is not the move of a politician preparing to throw caution to the wind.  

On entering government, Burnham would also inherit a plan for financial services that is already in motion – and that will act as a stabilising force. The Financial Services and Markets Bill will implement a series of reforms to the UK’s regulatory architecture that come with a long lead-time, and Burnham will have little interest in upending specific agendas that have deep buy-in from the financial services sector and parliamentary Labour Party alike. Less certain is his approach to the regulators more broadly – while Starmer effectively pushed a growth-oriented tilt, Burnham may be more ambivalent on the secondary competitiveness objective.  

Burnham’s largest challenge will be on the macro level. He is calling for greater investment while maintaining the fiscal rules and sticking to Labour’s previous tax pledges. With a high interest rate on national debt, anaemic growth and a series of spending commitments, that is quite the task. It is one which any new Chancellor will have to grapple with in short order before the Autumn Budget.  

Much remains unclear – but what the City of London needs most is consistency. A Prime Minister Burnham, and whoever is in No. 11, will need to be upfront about their funding plans and approach. It is that which will breed stability and engender support.