Andy Burnham has won the backing of 349 Labour MPs and is set to become Labour leader on Friday, before taking over as prime minister on Monday 20 July.
Darius McDermott, managing director of Chelsea Financial Services, warned that a more left-wing approach from the Chancellor could create challenges for bond markets. He also called for a change in tone around government messaging, particularly after what he described as negative language ahead of recent Budgets.
McDermott said that even if tougher policies were introduced, a more positive outlook on the country’s prospects could help improve sentiment.
McDermott warned that increased borrowing could lead to higher gilt yields and further inflationary pressure. He said the preferred outcome would be a stronger focus on maintaining fiscal discipline.