Financial markets are on edge as Labour leader Keir Starmer grapples with mounting pressure, potentially steering the party sharply leftward.
Concerns have intensified following Angela Rayner’s collaboration with Manchester Mayor Andy Burnham, unveiling a platform that includes increased taxation, expanded welfare, and nationalization plans.
This morning, interest rates on 10-year government bonds, a key borrowing tool for the state, experienced a slight rise.
As the Prime Minister’s hold on power diminishes after poor local election outcomes, contenders for the leadership position are emerging, with numerous MPs publicly urging his resignation.
Starmer might face a leadership challenge from a potential contender if his scheduled speech at 10 a.m. fails to quell the unrest.
To pacify Labour supporters, Sir Keir is set to propose further dismantling Brexit measures in his address.
However, he is not thought to be making big policy announcements, and expectations are low after a slew of abortive ‘reset’ efforts.
MPs have warned that the pro-EU message will go down like a ‘cup of cold sick’ in the Red Wall, while ex-aides warned it will be a ‘head in hands’ moment.
Desperate Starmer allies have been warning backbenchers that there could be a snap general election if he is ousted.
Ms Rayner acted last night amid worries on the Left that Blairite Wes Streeting is in pole position to take over from Sir Keir if there is an immediate contest.
The former deputy PM is still wrangling with HM Revenue & Customs over unpaid stamp duty, while Mr Burnham is not currently an MP.
That means both have an interest in delaying the denouement for Sir Keir until they are in a position to challenge.
As the carnage unfolds at Westminster:
- Loyalist Cabinet minister Peter Kyle insisted Mr Burnham should not fight a Commons by-election because Labour might lose the Greater Manchester mayoralty;
- More than 40 MPs have now called for Sir Keir to quit or set out a timetable for his departure;
- Backbencher Catherine West says she will formally launch a leadership challenge if she is not ‘satisfied’ with the PM’s speech;
Markets are braced for Labour to lurch dramatically to the Left as Keir Starmer desperately tries to save himself today
Jitters have been sparked after Angela Rayner formed an alliance with Manchester mayor Andy Burnham – and laid out a manifesto of higher tax, more handouts and nationalisations
The former deputy PM also hinted that she has linked up with Mr Burnham, calling for him to be allowed to stand at a Commons by-election
Interest rates on 10-year gilts, one of the main ways the Government borrows money, ticked up this morning
In a devastating 1,000-word verdict, Ms Rayner said the Peter Mandelson scandal showed a ‘toxic culture of cronyism’ and accused the PM of failing to help ‘working people’ enough.
The former deputy PM also hinted that she has linked up with Mr Burnham, calling for him to be allowed to stand at a Commons by-election.
The pair were caught holding a secret summit at her house in Greater Manchester last month, with speculation they were mulling a ‘dream ticket’.
Ms Rayner said the Government had allowed ‘wealth and power to concentrate at the top’, demanding a wave of nationalisations.
She said her controversial workers’ rights overhaul should be ‘just the start’, and indicated a push for more taxes on the wealthy and business to fund handouts for struggling households.
Britain should emulate countries such as Spain instead of carrying on with ‘deregulation, privatisation, and trickle-down economics’, she said.
‘We are in danger of becoming a party of the well-off, not working people,’ she added.
Allies of Mr Burnham have also been laying out their desire for mass nationalisations.
Economists have warned that the prospectus being set out by the Left-wing candidates could trigger chaos on the markets.
One London hedge fund boss told the Daily Mail: ‘If Rayner gets in, the sterling and bond market will get smashed. It will be the shit show to end all shit shows.’
Ms Rayner acted last night amid worries on the Left that Blairite Wes Streeting is in pole position to take over from Sir Keir if there is an immediate contest
Mr Streeting’s camp has been spreading the message that ‘no one in the City trusts Andy Burnham’.
Simon French, of Panmure Liberum, said Ms Rayner’s plan was ‘for an economy some parts of the Labour Party believe exists – not the reality of one where the tax take is already at an 80 year high, concentration of tax on high earners & on assets is already high by international standards’.
‘The minimum wage has moved way higher than the international benchmark, and growth is clearly impaired by the frictions of the high cost of energy, building & capital.
‘I would predict that if the Rayner statement became a detailed policy platform you would see the Gilt vs Other Sovereign spread widen, not narrow.’
More than 40 Labour MPs have now indicated they want Sir Keir to depart.
Navendu Mishra, previously a Parliamentary aide to Ms Rayner, said the PM should set out a timetable for an ‘orderly transition’.
Speaking on BBC Radio 4’s Today programme, Mr Mishra said such a move would allow the ‘best people’ in the Labour Party time to ‘put forward their vision’.
Asked whether he was referring to Mayor of Greater Manchester Andy Burnham, Mr Mishra said: ‘I think he’s done some really good things in my constituency of Stockport, and in Greater Manchester, and he has the experience of a previous Labour government, having served in senior roles including in the cabinet.’
Asked about a potential leadership bid from Ms Rayner, he added: ‘Look, I think she’s from Stockport… if you look at her achievements coming from Stockport, as a trade unionist, a Stockport trade unionist, I think are phenomenal.’
In his speech, Sir Keir will say: ‘To meet the challenges that our country faces, incremental change won’t cut it.
‘On growth, defence, Europe, energy – we need a bigger response than we anticipated in 2024 because these are not ordinary times.
‘Strength through fairness. It’s a core Labour argument. And you will see those values writ large in the King’s Speech. And you will see hope, urgency and exactly whose side we are on.’
Sir Keir has acknowledged the early part of his premiership was too gloomy, with ministers setting out the parlous state of the economy and public services they inherited without sufficiently highlighting plans to improve people’s lives.
‘People need hope,’ he will say. ‘We will face up to the big challenges and we will make the big arguments.’
Highlighting his efforts to build new ties with Brussels, Sir Keir will say: ‘This Labour Government will be defined by rebuilding our relationship and by putting Britain at the heart of Europe. So that we are stronger on the economy, on trade, on defence, you name it.
‘Because standing shoulder to shoulder with the countries that most share our interests, our values and our enemies – that is the right choice for Britain, that is the Labour choice.’
Business Secretary Peter Kyle was sent to TV studios to try to cool the temperature in the party this morning.
But he risked deepening frustration by insisting the PM should serve another eight years in Downing Street.
Mr Kyle also told Sky News he went to the cinema with Mr Streeting last week.
‘Somebody who is planning to pull the plug and launch a leadership bid in a couple of days’ time doesn’t go to the cinema with a friend,’ he added.
Asked what film they watched, he said ‘Devil Wears Prada’, later describing it as ‘good’ and ‘fun’.
Mr Kyle also said: ‘Wes and I are very good friends, but I’m not going to fall into the trap of being his spokesperson, but what I can tell you is that he, like me, is focused on the success of this Government.
‘His primary mission in Government is making sure the whole Government is a success and he is there for Keir when he needs him.’
