UK Bond Yields Rise With Starmer’s Future as Prime Minister in Doubt

Even as Keir Starmer vowed to fight on as prime minister, Britain is facing a politically perilous moment.

At least that’s what the bond markets are saying.

On Tuesday, the British pound and the price of government bonds dropped as a rebellion within the governing Labour Party gathered pace to push Mr. Starmer out. The pound fell 0.5 percent to $1.35. Bond yields, which move inversely to prices, jumped. The benchmark 10-year yield climbed to 5.12 percent, up from 5 percent on Monday evening, a sizable move. The yield stayed at that level later in the day after Mr. Starmer said he would get on with governing. But resignations from members of his team continued.

In British politics, the bond market has come to hold huge sway. The premiership of Liz Truss was cut short in 2022 amid convulsions in the bond market after investors balked at her borrowing and spending plans. This time, that market has signaled support for Mr. Starmer and his government’s intentions to bring down debt levels by sticking to ironclad fiscal rules.

But uncertainty over how long Mr. Starmer will retain his position is adding strain to the bond market. The rising yields signal concern that a new political leader might be tempted to borrow more to pay for more spending and investments.

Article source: https://www.nytimes.com/2026/05/12/business/britain-bonds-gilts-keir-starmer.html