Societe Generale’s UK economists highlight ongoing political uncertainty stemming from Manchester Mayor Andy Burnham’s confirmation that he will challenge Keir Starmer for Labour leadership if he wins the Makerfield by-election. A poll cited indicates Burnham would secure 49% of the vote in the 18 June Makerfield by-election, compared to 39% for Reform. Burnham has also stated he would not call a snap general election if he became leader [1].
On the monetary policy front, Monetary Policy Committee (MPC) member Megan Greene signaled in both a Financial Times article and a speech that she would likely vote for a rate hike at the June meeting, joining Huw Pill, who voted for a hike in April. Despite these hawkish positions, Societe Generale expects these members to remain in the minority and forecasts that the Bank of England (BoE) will keep rates on hold in June [1].
Regarding economic data, Societe Generale projects that April Gross Domestic Product (GDP) will rise by 0.1% month-on-month, but anticipates that growth will slow later in 2026 [1].
The combination of political uncertainty and a divided MPC suggests a cautious market outlook, with limited expectations for radical policy changes in the near term [1].
CONCLUSION
Societe Generale expects the BoE to maintain its current rate stance in June, despite hawkish signals from some MPC members. Political developments around Andy Burnham’s potential Labour leadership bid add uncertainty, but are not expected to drive significant policy shifts in the immediate future.