UK Health Secretary Wes Streeting resigned from the government on Thursday, saying he no longer has confidence in Prime Minister Keir Starmer and that it was "now clear that you will not lead the Labour Party into the next general election." Streeting cited last week's "unprecedented" local council election losses as a driving factor in his decision, according to CNBC.
Streeting is widely expected to launch an imminent leadership bid, positioning himself as a centrist continuity candidate. His resignation came as bond traders were already bracing for more instability, with investors fearing that a more left-leaning prime minister could lead to increased borrowing, higher public spending, and rising debt.
Two other potential candidates have also emerged. Starmer's former deputy Angela Rayner has reportedly been cleared of deliberate wrongdoing over her tax affairs, boosting her chances of a leadership run. Separately, supporters of Greater Manchester Mayor Andy Burnham are said to be pressing the Labour Party's governing body to extend the timeline for any forthcoming leadership election so that he can secure the parliamentary seat he would need in order to run.
A Labour leadership election can only be triggered if the leader resigns or if 20% of MPs nominate a challenger, meaning 81 Labour lawmakers would need to back an individual bid. As of Thursday, 94 MPs had called on Starmer to resign, while 161 had backed him to remain in office.
Competing bids from candidates with different ideological leanings have added to the anxiety in bond markets. The yield on the benchmark 10-year gilt stood at 5.028%, down 4 basis points as of midday London time, while the 30-year gilt hovered around 5.695%, down 6 basis points.
Analysts warned that the situation could deteriorate further. Neil Wilson, investor strategist at Saxo UK, said that "everything seems to be aligning for a leadership contest that will unease bond investors." He added that he expected gilt markets to "continue and likely see yields print fresh multi-decade highs should a leadership contest occur."
James Turner, head of Global Fixed Income EMEA at BlackRock, told CNBC that "not only did we have the inflation coming through from the Middle East and oil prices rising but then we also have the leadership uncertainty."
Chancellor Rachel Reeves, one of Starmer's most prominent allies, told the BBC earlier Thursday that a leadership contest "would plunge the country into chaos." Starmer has vowed to fight on.
