Sir Keir Starmer’s decision to step down as UK prime minister and Labour leader has turned attention towards the future of the country’s financial services and technology policies, with industry figures warning against delays to an already crowded regulatory programme.
Starmer announced on Monday that he would remain as UK prime minister while the Labour Party selects a successor. Nominations are due to open on 9 July, with the process intended to conclude before Parliament returns in September if a contest takes place.
His successor will become the UK’s seventh prime minister in around a decade. Andy Burnham, the newly elected MP for Makerfield and former mayor of Greater Manchester, has entered the race and is currently regarded as the frontrunner.
Although a change of prime minister does not immediately alter legislation or the work of independent regulators, it can affect the order in which policies reach Parliament, the political support behind them and the time available for implementation.
Payments sector seeks policy continuity
Emma Banymandhub, chief operating officer at The Payments Association, said the succession would provide another test of the UK’s ability to offer a stable environment for financial technology companies and their investors.
“Will the seventh prime minister deliver the political stability needed to maintain confidence among overseas fintech investors?” she said. “The UK’s position as the global payments leader would certainly benefit from this being the case.”
Banymandhub said the payments sector remained resilient, but firms would be watching closely for any change in the direction or pace of financial services policy.
“The incoming administration must ensure the transition does not slow critical regulatory and legislative momentum,” she added.
Among the policies cited by the association were continued delivery of the National Payments Vision, the development of a competitive stablecoin framework and the responsible use of artificial intelligence across the payments industry.
These programmes are already moving through different stages of implementation. The government’s Payments Forward Plan, published in February, set out work covering retail payment infrastructure, open banking and changes to payments regulation. The proposed consolidation of the Payment Systems Regulator into the Financial Conduct Authority still requires primary legislation.
Stablecoin regulation has also reached an active stage. The Bank of England published its policy statement and draft rules for sterling-denominated systemic stablecoins on the same day that Starmer announced his departure, while the FCA is preparing its rules for stablecoin issuers and cryptoasset custodians.
The immediate concern for payments firms therefore centres on delivery rather than the creation of another strategy. A leadership contest and possible ministerial changes could affect legislation awaiting parliamentary time or alter which parts of the programme receive political attention.
Investors look beyond the initial market response
Financial markets showed little immediate reaction to Starmer’s announcement. Sterling and government bond prices moved only slightly, while the FTSE 100 later closed 0.7 per cent higher, helped by gains among large UK banks and developments in the Middle East. The domestically focused FTSE 250 ended the session broadly flat.
The subdued response suggested investors had already accounted for the possibility of Starmer leaving. Attention is now moving towards the economic policies of his successor and the identity of the next chancellor.
Susannah Streeter, chief investment strategist at online investment service Wealth Club, said the repeated turnover at Downing Street had affected perceptions of the UK among international investors.
“A remarkable level of political upheaval for a developed economy,” she said. “Combined with the lingering effects of Brexit, the revolving door at Number 10 has tarnished the UK’s reputation as a stable place to do business and made it harder to attract the long-term investment needed to drive stronger economic growth.”
Streeter said investors would examine how Burnham’s preference for a more active role for government might translate into national policy, particularly where public investment, regulation and private capital meet.
Wealth Club also called for stronger incentives to direct investment towards UK growth businesses, including a reversal of recent changes to Venture Capital Trust relief. The issue has direct relevance to fintech, where access to later-stage capital remains a persistent concern for companies seeking to expand without relocating overseas.
The next government will face limited room for additional spending. Public sector borrowing reached £23.3 billion in May, around 30 per cent higher than a year earlier, while borrowing during the first two months of the financial year exceeded the Office for Budget Responsibility’s forecast by £7.7 billion.
Scott Dawson, chief executive of payment technology company DECTA, also linked political stability with the UK’s ability to attract overseas investment.
“The country needs stability, and a major part of that comes from having a steady hand at the rudder,” he said. “Six prime ministers, soon to be seven, in the past 10 years doesn’t show the kind of stability that overseas investors need.”
Dawson argued that the next administration’s economic priorities would also affect payments companies through their influence on consumer spending and business formation. His comments reflect one industry view of the succession rather than an assessment of which candidate or economic programme would produce that outcome.
Digital rules face renewed scrutiny
Starmer’s departure has also prompted calls for the next government to reconsider parts of the UK’s wider digital regulation.
The Consumer Choice Centre, a free-market consumer advocacy group, used the announcement to renew its opposition to age-verification requirements under the Online Safety Act and proposals for restrictions on social media use among under-16s.
Yaël Ossowski, the organisation’s deputy director, argued that the government’s approach placed excessive demands on adults accessing lawful online content and created privacy and data-security risks.
The group called for a review of the age-verification provisions and for plans covering younger social media users to be abandoned. These are contested positions, with supporters of stronger controls arguing that age assurance is needed to protect children online.
Although the debate extends beyond financial services, it overlaps with fintech through the use of digital identity, facial verification, payment card information and third-party providers to establish a user’s age. Any policy change would affect technology companies developing identity and verification services, as well as platforms responsible for collecting and protecting the resulting data.
The first indication of the new administration’s approach may come from the policies already carrying deadlines. The FCA has been working towards final stablecoin rules during summer 2026, the Bank of England’s latest systemic stablecoin consultation closes on 22 September, and legislation for the PSR’s consolidation into the FCA is still waiting for parliamentary time.
