Sharks are circling UK PM Keir Starmer, with his leadership vulnerable
2025-11-12 11:02:16
British Prime Minister Keir Starmer attends a mass commemorating the 80th anniversary of Yugoslav Army Day at the National Memorial Arboretum on August 15, 2025 in Alrewas, Staffordshire.
Anthony Devlin | Getty Images Entertainment | Getty Images
UK Prime Minister Keir Starmer is looking increasingly weak this week amid growing speculation that he could face a leadership challenge after the Autumn Budget later in November.
Economists expect Chancellor Rachel Reeves, Starmer’s right-hand man at the Treasury, will be forced to break Labour’s pledges not to raise taxes on workers when she unveils her fiscal plans in the Budget on November 26.
Reeves finds herself in an unenviable position as she tries to plug the financial black hole created by Labour’s spending pledges, reversals of reform spending cuts and her own rules on limiting borrowing.
Raising taxes on working people is likely to anger not only voters, who have expressed disappointment with Starmer’s leadership since Labour’s landslide election victory in July 2024, but also senior members of the Prime Minister’s senior team in the Cabinet.
The BBC reported on Wednesday that a number of high-profile names – and Starmer allies – are being circulated as potential replacements for the Prime Minister should a leadership challenge arise, including Health Secretary Wes Streeting and Home Secretary Shabana Mahmood.
Other names mentioned by the BBC These include Ed Miliband, the Energy Secretary, and MPs including former Transport Secretary Louise Hay.
Rebellion afoot?
The man seen as the main contender when it comes to a potential challenge to Starmer’s leadership, Wes Streeting, denied there was a conspiracy afoot, telling Sky News on Wednesday that he had no plans to try to oust the Prime Minister. Instead he accused the Prime Minister’s allies of filing a brief against him in what he said was “self-defeating and self-destructive behaviour”.
British Health Minister Wes Streeting speaks during an event to launch the NHS Day of Action on March 28, 2025 in Runcorn, England.
Cameron Smith | Getty Images News | Getty Images
Asked whether he would launch a leadership challenge after the Budget, Streeting told Sky’s ‘Mornings with Ridge and Frost’: ‘No’, saying nightly briefings on the issue were ‘entirely self-defeating… not least because they are untrue’.
Streeting said that although he did not support Starmer’s initial bid to lead the Labor Party, he had supported the prime minister “from the moment he was elected”.
However, the narrative about a potential leadership challenge is damaging to a prime minister who is seen as having performed well on the world stage — ingratiating himself with US President Trump and fellow EU leaders, and striking trade deals with the US, India and the EU last year — but doing poorly with voters at home.
Public discontent over illegal immigration, the economy and the criminal justice system has been growing in recent months, following the recent wrongful release of several prisoners, with support for the right-wing Reform Party growing, making it a major threat when local elections are held in May. The next general election is not scheduled to be held until 2029.
YouGov poll in October It showed that only 21% of Britons have a positive opinion of the Prime Minister, compared to 72% who see it negatively. This left Starmer with a net positive rating of -51, the lowest YouGov has recorded to date, the poll said.
Left shift?
Analysts say the risks to Starmer’s leadership are “likely to be noise at the moment” and that the Prime Minister will remain in office for the time being. However, Starmer’s critics are growing more confident and are likely to smell blood, with the budget and next year’s local elections in May the next big test of public opinion, and likely to be crucial turning points.
“Starmer is facing the worst poll in the history of any modern prime minister, and there is no smoke without fire,” Jordan Rochester, head of EMEA FICC strategy at Mizuho Bank, said in email comments on Wednesday.
He added: “If the budget is approved without major disruption, the idea of replacing the leadership will be floated at local elections in May as opinion polls point to a major loss for Labor in the future. A moment that could lead to leadership changes.”
There are two scenarios for what this means for markets, Rochester said, noting: “We are leaning towards the ‘centre’ continuing to be the ultimate victor, but if that happens the market will need to weigh the risk of a hard left shift.”
Monitor the markets
Markets were closely monitoring the reports on Wednesday as yields on British government bonds – known as bonds – rose across the maturity curve on Tuesday.
By 10:10 a.m. in London, the return on the index 10 golden years It added 3 basis points to trade at 4.419%. Bond yields and prices move in opposite directions, so when investors are reluctant to lend to the government, the bond price falls and the yield rises.
The UK government currently has the highest borrowing costs of any G7 country, with 30-year government bond yields trading well above the critical threshold of 5%.
United Kingdom Prime Minister Keir Starmer and his wife Victoria Starmer serve tea and cake in Downing Street on May 5, 2025 in London, England.
Peter Nicholls | Getty Images News | Getty Images
Meanwhile, the British pound fell 0.27% against the US dollar to trade at $1.311, and was down 0.1% against the euro.
“Markets are watching Westminster closely,” Nigel Green of DeVere Group commented on Wednesday.
He added: “The emergence of rumors about government leadership ahead of the crucial budget reinforces the feeling that the government is under pressure. Investors have not yet taken into account political instability, but they are alert to the risk of this story returning in the new year.”
“We think it is unlikely that there will be a direct leadership challenge after the Budget – the priority will be to pass it cleanly, but this will be very difficult now that an income tax rise now appears almost inevitable.”
— CNBC’s Chloe Taylor contributed to this story.
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