Analysis: Hopes rise for transition in consumer confidence

We appear to be moving towards the resolution of two key areas of uncertainty which to varying degrees have impacted consumer and business confidence and made for a more difficult travel market.

Prime minister Keir Starmer’s confirmation he will stand down on Monday should enable a smooth transition to his probable successor Andy Burnham, who returned to Parliament as MP for Makerfield the same day.

The alternative appeared to be a damaging series of cabinet resignations. That has been avoided.

Former health secretary Wes Streeting’s announcement that he backs Burnham cleared the latter’s way to Number 10, meaning he could be PM by July 17, although he may seek more time from Starmer. In the unlikely event there is a challenger, Burnham should be PM by September 1.

So, the prospects of further political uncertainty at the head of government have been removed. But there remains plenty uncertain and Burnham faces all the problems that confronted Starmer.

Attention now turns to who he selects as chancellor to replace Rachel Reeves and what that means for Whitehall’s tax and spending plans and how the bond markets react – meaning the impact on government borrowing. Burnham will be keen not to alarm bond traders. They may be keen to demonstrate their ability to alarm him.

The new PM does not have much time. The Truss government will have had longer to prepare if Burnham is in Number 10 by mid-July, and we know how that turned out.

Burnham is already being urged to call a snap election. That seems unlikely. He will want to demonstrate his authority and capacity to bring change first. But the next election may now come sooner than 2029.

Louise Haigh, former transport secretary, is running the transition team. Outbound travel will hardly be on the agenda, but issues of concern to the sector will be – economic growth, the cost of living, business rates, employment costs, and so on.

One issue on which the industry may see less commitment from a Burnham government is the rush to start work on a Heathrow third runway by 2029. The project’s resurrection is almost wholly down to Rachel Reeves. Burnham has previously questioned the need for a third runway, arguing for growth to be spread nationally. Energy secretary Ed Miliband, a leading Burnham backer and contender to be chancellor, is opposed.

In the Gulf, the Foreign Office’s removal of advice against all but essential travel to the UAE and Qatar was welcome and the US-Iran peace held into a second week despite Israel continuing to attack Lebanon and Iran saying it had closed the Strait of Hormuz again.

The US denied this, but the scope for a breakdown is clear. Given it took two months to turn a 14-day ceasefire into a 60-day one, the process seems likely to roll over into another 60 days and another without removing the possibility of a return to war.

So, the path to a resumption of normal fuel supplies and relief of the cost pressures likely won’t be straight.