Will new Prime Minister Andy Burnham be bad for the stock market?

Andy Burnham has now been in office as Prime Minister for around a month.

In that time, he’s made a few small policy announcements. That includes a VAT cut on electricity bills from October, a £2 fare cap on most bus routes, and a business rates cut for pubs, clubs, and live music venues. 

Outside of these relatively modest changes, we haven’t seen grand policy reforms. It’s likely that we’ll learn more from his new Chancellor, John Healey, at their first Budget on 28 October.

However, that hasn’t stopped many people speculating about what Burnham’s premiership will mean for their money.

A recent Boring Money survey found that, while many people are broadly neutral about his policies, 50% think he’ll be bad for their personal finances.

That’s particularly true for very confident investors. Of those polled, none said they felt positively towards what his leadership would mean for their finances.

Often, a change in Prime Minister can lead to a shift in policy. 

Former Prime Minister Keir Starmer’s politics are widely considered to be centrist, appealing to a broad range of people. 

Meanwhile, Burnham’s promoting his “business-friendly socialism” mandate. A more left-leaning position might lead you to think that his tenure could be bad for markets.

However, in the long term, markets don’t actually react that much to who’s in the hot seat.

Markets don’t really react to Prime Ministers in the long term

To think about market performance and Prime Ministers, we need to take a long-term view. So, let’s go back to May 1997 when Tony Blair was elected, giving us almost 30 years of data. 

Between then and now, before Burnham took power in July, the UK had eight Prime Ministers. 

Of those, three were from the Labour Party - that’s Blair, Gordon Brown, and Keir Starmer. The other five - David Cameron, Theresa May, Boris Johnson, Liz Truss, and Rishi Sunak - were all Conservatives.

The graph below shows how the FTSE 350 - an index of the 350 largest companies in the UK - performed between May 1997 and July 2026. The data points are monthly, rather than daily.

It’s split out by each Prime Minister’s tenure, with the dots marking the start and end of their premierships. In line with the parties’ colours, red is Labour, blue is Conservative.

The first and most obvious point we can see from this data is that, despite the different leaders, the line trends upwards.

You might look at Gordon Brown and Boris Johnson’s segments and conclude that their leadership led to dramatic falls in value.

However, we need to take into account the unique circumstances they faced. Brown took over at almost the very start of the 2007/08 financial crisis. For Johnson, it was the 2020 Covid-19 pandemic.

Both these periods led to market falls that were independent of any government decisions.

Likewise, it’s also important to look at the context of Tony Blair’s rises and falls.

Blair presided over the dot-com bubble in 2000. In this well-known market event, valuations for new internet companies grew massively. When the bubble ‘popped’, the market fell significantly. 

That’s why we see a drop from there to 2003, followed by a recovery and return to growth after.

Again, this wasn’t a fault of poor governance. Rather, surrounding circumstances outside of the government’s control led to a dip. It wasn’t necessarily Blair’s excellent leadership that led to the recovery, either.

Even when we zoom in on bad government decision-making, the impact is barely noticeable. 

For example, Liz Truss’s disastrous Mini-Budget briefly caused both the pound to fall and a crisis in the UK bond markets. But stock investors barely reacted to those circumstances.

This effect isn’t isolated to the UK

We don’t just see this trend in the UK’s political divide, either. The same is true for the S&P 500, an index of the 500 largest companies in the US.

This chart shows the index’s performance over the same time frame. It spans six terms and five Presidents, with Donald Trump’s two tenures interrupted by Joe Biden’s presidency.

Of these Presidents, three are Democrats: Bill Clinton, Barack Obama, and Biden. The other two - George Bush and Trump - are Republicans.

The colours match their parties again, with red for Republicans and blue for Democrats. It isn’t an exact equivalent but Democrats are broadly more politically aligned with the UK’s Labour Party. Republicans would be closer to the Conservatives.

Just as we saw with the UK data, the market trends upwards over time. 

Again, there are a few outliers to note where the market dips outside the President’s control.

In this case, we see it similarly with the Covid-19 pandemic under Trump. Likewise, it’s the same for Biden in 2022, with the fall coinciding with Russia’s invasion of Ukraine.

We can say this for the market’s immense success under Biden and Trump post-2022, too. This can largely be attributed to the incredible run from the US’s big tech stocks (the ‘Magnificent Seven’).

Staying invested can be the right course of action

All this goes to show that staying invested and riding out market volatility would’ve left you better off in the long term.

It’s true that there would’ve been better and worse days individually in the market. In fact, if we examine the data on a granular level, we’d likely see investors reacting when a new Prime Minister or President stepped into office. 

They might’ve moved their money for fear of what the new leader might mean for the market. Or they could’ve invested heavily with the election of a pro-business candidate.

Yet, over this period, the trend is clear for these two markets: long-term growth, no matter who’s been in charge.

Past performance doesn’t necessarily tell us what’ll happen in future. But history suggests that staying invested can help you grow your wealth in the long term, even if markets move up and down over time.

So, if you’re feeling worried about what the new Prime Minister’s policies could mean for your investments, take a beat and remind yourself what the long-term data shows.

Risk warning

As always with investments, your capital is at risk. Past performance is not an indicator of future performance. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.