Borrowing costs soar as Starmer ally opens door to PM’s exit
Government borrowing costs soared as bond traders took an ill view of pressure on Sir Keir Starmer’s future as Prime Minister and Labour leadership wars brewing in Westminster.
For weeks, City investors have been on high alert as fears mounted that a mass rebellion would be triggered after devastating local election results.
Traders fear the worst scenarios may be coming to pass as gilt yields spiked on Tuesday morning, with the 10-year yield rising by ten basis points.
The 30-year gilt yield also spiked by more than 10 basis points.
The Prime Minister’s chief secretary and one of his closest allies refused to confirm whether Sir Keir Starmer will be the one leading the Labour Party into the next election, just minutes before markets opened.
Cabinet minister Darren Jones said on Tuesday morning: “Obviously colleagues are asking the prime minister to consider different options in the future, and as I say, he rightfully is listening to them.
“It would be wrong if he wasn’t listening to them.”
When asked directly whether Starmer will still be in Number 10 come the next election, Jones said: “I’m not going to get ahead of any decision that the Prime Minister may or may not make.”
Starmer’s challengers set up stall
The comments mark a major tone shift from Starmer over the weekend, who pledged he would not “walk away” and set his sights on a decade of government.
A separate left-wing group of Labour MPs also took aim at the government’s fiscal rules, with a policy paper claiming they “resolved in favour of caution”.
The paper also called on the government to tax wealth more heavily and to reward work.
Peel Hunt economist Kallum Pickering said the bond markets acted an “important check and balance on policy nonsense in the UK” and said investors wanted policies that curtailed inflation and boosted growth.
Another policy paper from a centrist group called for the government to close more tax loopholes and cut national insurance for employees.
Over 70 members of the Labour party have now called for Sir Keir Starmer to resign given Labour lost nearly 1,500 councillors across England in local elections.
Home secretary Shabana Mahmood also called for the Prime Minister to set out a timetable for his departure.
Starmer will meet with the Cabinet later this morning as his position comes under further scrutiny.