It’s back to chaos in the UK.
Five days on from a very tough round of municipal elections in England (where Labour lost 1,229 councillors) and an unthinkably poor result in Wales (where Welsh Labour’s century-old grip on local politics collapsed in a third-place showing for parliament seats), Keir Starmer’s on the ropes.
As of Tuesday morning in the UK, five-dozen Labour MPs had called on Starmer to resign, forcing markets to grapple anew with a reality that’s every bit as self-evident as it is difficult to accept: The UK’s mostly ungovernable since Brexit.
Despite tepid reassurances from a handful of Labour MPs who suggested the party won’t pursue a reckless fiscal expansion regardless of Starmer’s fate at No. 10, gilts traded very heavy. 30-year yields flirted with 6%, the highest in almost three decades.
The latest political tumult’s insult to injury for UK bonds, which were already under pressure from soaring oil prices. The BoE, which was forced into a hawkish pivot by the war, needs another political crisis about like they needed another energy shock.
It seems like a lifetime, but it wasn’t even two years ago that Labour handed Conservatives their worst-ever election loss. As Bloomberg put it early this week, “Labour is busy proving that these days even a landslide election victory and a three-figure parliamentary majority provides only temporary respite before British politics returns to plotting and instability.”
As was the case when Labour trounced the Tories in July of 2024, Nigel Farage and his far-right “reform” party are benefitting enormously from ongoing public disaffection. Reform gained even more councillors than Labour lost last week. Farage called it “a big, big day” presaging the “complete reshaping of British politics.”
Far be it from me to pronounce upon the merits or relative wisdom of free-choosing Brits, but I’m not sure UK politics needs any more “complete reshapings,” unless by that you mean a “reshaping” of the utterly chaotic into something that more closely resembles a stable democracy.
By now, the UK political scene’s spent an entire decade embroiled in abject chaos. (“And US politics hasn’t?!” shouted my UK readership.)
Late last week, while acknowledging the local election wipeout, Starmer cited the recent legacy of disarray in insisting he won’t step down. “I won’t walk away and plunge the country into chaos,” he said.
On Tuesday, Starmer’s housing secretary exhorted the party against an internal revolt. “This is not a game,” Steve Reed warned.”This instability has consequences for people’s lives.”
