Prime Minister Keir Starmer’s resilience after election setbacks eases near-term UK bond market volatility, analysts say.
UK gilt yields fell modestly on Tuesday after Prime Minister Keir Starmer rebuffed calls for his resignation following last week’s electoral losses. The move signaled political stability, easing investor concerns over immediate leadership turmoil.
Markets had braced for heightened volatility after Starmer’s Labour Party suffered a sharp rebuke in local elections, raising doubts about his premiership. Comparable periods of political uncertainty, such as Liz Truss’s tenure, saw gilt yields spike over 100 basis points.
The yield on 10-year gilts dropped 3 basis points to 4.25% in early trading, reflecting reduced risk premiums. Analysts cautioned that longer-term fiscal challenges remain unresolved.