Why the Epstein furor could bring down Starmer’s UK government

The revelation of more of the Epstein files last week sparked a chain of events that left British Prime Minister Keir Starmer fighting for his political life, despite the fact that he never knew the late financier and sex offender.

Starmer is under pressure over his decision to appoint Peter Mandelson as US ambassador, despite his knowledge of Mandelson’s ties to… Epstein. The latest document released by the US Department of Justice revealed more messages between Mandelson and Epstein, including after Epstein pleaded guilty in Florida to a felony charge of solicitation of prostitution, a case involving an underage girl.

Starmer, who is facing calls to step down, apologized to Epstein’s victims for believing Mandelson’s “lies”.

Starmer held a pivotal meeting with Labor MPs afterwards, where he said: It is said He said he was “not ready to leave.”

A spokesman for the Prime Minister’s Office could not immediately be reached for comment.

He is known as the fixer behind the scenes and is nicknamed “”Prince of DarknessMandelson was a Labor member of Parliament from 1992 to 2004 and served in Blair’s government.

He left Parliament to become a European Commissioner before returning to Britain in 2008 to work for then Prime Minister Gordon Brown, after being appointed to Parliament’s unelected House of Lords.

After becoming prime minister in July 2024, Starmer appointed Mandelson as ambassador to Washington in December that year, a role he described at the time as a “great honour”. The appointment was controversial as Mandelson had resigned twice before – in 1998 and 2001 – due to scandals: one over not declaring a loan and another over alleged influence over a passport application.

Starmer fired Mandelson as ambassador in September, after Downing Street said new information had come to light about the extent of his association with Epstein.

suffix Unblock millions of files Information from the US Department of Justice last week showed further links between Mandelson and Epstein. They brought up the accusations made by Mandelson Sending sensitive government information to the market to Epstein in the wake of the 2008 global financial crisis.

One exchange showed that Mandelson gave Epstein advance notice of an impending €500 billion bailout of banks in 2010.

In a statement to Britain’s Sky News last month, Mandelson apologized for remaining friends with Epstein after his 2008 conviction.

He said: “I was not at fault, I was not aware of what he was doing, and I regret, and will regret until the day I die, the fact that helpless women were not given the protection they had a right to expect.”

Return on the index 10 golden years It decreased by 3 basis points to 4.496%, while the index decreased 30 gilded years The yield also decreased by 4 basis points to settle at 5.309%.

“Uncertainty over Keir Starmer’s future is unhelpful for UK bond markets, especially as inflation is on track to fall sharply in the coming months, and the Bank of England looks set to cut interest rates as soon as March, with one or two further cuts later in the year,” Charlie Lloyd, head of investments at Shackleton Advisors, said in a note on Monday.

Lloyd added that Starmer’s resignation would lead to a competition within the Labor Party to replace him as leader, which “will certainly lead to short-term volatility in UK bond markets and an increase in the cost of borrowing through higher yields.”

He continued: “Prolonged competition could impact the economy if government bond yields trade at a premium to other bond markets for an extended period, not to mention the potential impact on consumer confidence.”

Among the potential candidates to succeed Starmer is left-leaning Angela Rayner to resign Current Health Secretary Wes Streeting and former party leader Ed Miliband took over as deputy prime minister last fall after a tax scandal.

Andy Burnham, the current Mayor of Greater Manchester, was recently Forbidden From running in a special election that could have seen him return to Parliament – paving the way for a potential leadership challenge.

Despite Burnham’s popularity, investors are wary of a shift away from efforts by Starmer and his finance minister, Rachel Reeves, to shore up the UK’s public finances.

Callum Pickering, chief economist at Bill Hunt, said in a note on Tuesday that Burnham “holds a strong position in the polls”, but “whether his successful regional economic policies will translate into successful national policies is an open question – his previous criticism that the UK is ‘overburdened by bond markets’ has worried investors.”

Pickering said the fact that Rayner remained under investigation over her tax affairs “harms her chances – and risks the narrative of one disgraced prime minister being replaced by another”. But he added: “Her popularity within the party suggests that she may be able to unite the left with the moderates.”