UK assets face underestimated risk event, analysts warn as PM hopeful swerves call to calm investor nerves

Key points

• The U.K. has the highest borrowing costs in the G7, with yields on its long-term gilts trading well above the critical 5% threshold.
• Political instability and Burnham's bid to return to Westminster has sent jitters through the U.K.'s government bond market in recent weeks, amid expectations that he would be a tack to the left from Starmer and ramp up borrowing.
• Starmer's premiership has been under intense pressure following a crushing defeat for the ruling Labour Party in the U.K.'s local elections.
• Burnham — who is not yet a sitting member of the U.K. parliament — will run in the June 18 by-election in Makerfield, north-west England.
• If he wins the seat, he is widely expected to launch a formal challenge to usurp Starmer's position.