"A new uncertainty": there is a growing crisis in Britain's prime minister's party. What's in the markets?

British markets were again under selling pressure on Thursday, Ma. 14, after a key member of the UK government - Health Minister Wes Streeting - decided to leave his post, increasing speculation about a possible leadership battle in the party against British Prime Minister Keir Starmer, writes Reuters, indicating that the intra-party struggle could lead to a new round of political instability in the UK.

Amid the failure of local elections in Britain for the Labor Party, the kingdom's health minister Wes Streeting has decided to resign from Keir Starmer's government, paving the way for himself to vie for the post of British prime minister, Bloomberg notes. "It is now clear that you [Keir Starmer] will not lead the Labour Party into the next general election, and that Labour MPs and Labour unions want to begin discussions about what happens next," Streeting wrote in a letter to Starmer, which he published in X.

At the same time, Streeting has not yet announced his intention to immediately vie for the leadership of Britain's prime ministerial party. Instead, he has publicly called on Starmer to "facilitate" a new party election, saying he would like to see "the strongest possible lineup of candidates" for prime minister.

A Bloomberg source familiar with Streeting's position said that the politician does not plan to formally launch the party's leadership contest against Starmer on Thursday, Ma. 14, but would not rule out such a move in the coming days.

The pound sterling was down 0.1% to about $1.35 on Ma. 14, while the yield on benchmark 10-year British government bonds (Gilts) was down nearly five basis points to 5.02%. The yield on 30-year British government bonds, which are more sensitive to fiscal and political risks than shorter-dated securities, fell five basis points to 5.69%.

Pan-European index STOXX Europe 600 added 0.76% in trading on Ma 14, the British index FTSE 100 during the session slowed growth to 0.05%, but eventually ended the day in the plus by 0.46%.

- "Wes Streeting's departure [as health minister] represents a new phase of uncertainty in the UK," said Investec chief economist Philip Shaw (quoted by Reuters). - 'We can assume he has the necessary 81 votes of support to initiate a formal challenge to the prime minister,' he added." Bloomberg explains that unless Starmer himself initiates a new election for Labor Party leader amid the party's failed local elections, a possible challenger to his post would need to get the support of 20% of Labor MPs. The party now has 403 MPs in parliament, so the threshold for nominating a new candidate for party leader is 81 votes. The main question for markets is what the future direction of UK fiscal policy will be, Shaw emphasized. According to him, despite the huge uncertainty created by the current situation, there are still far more questions than answers.

- "This brings us another step closer to a leadership contest in the Labor Party," Nick Rees, head of macroeconomic research at Monex Europe, said in turn (quoted by Reuters). - Exactly how many steps are left until [this situation is resolved] remains to be seen. Notably, in his letter, Streeting expressed his preference for a wide range of candidates for the party leader election. Looking at the situation from the top, this means a protracted struggle and continued uncertainty that will weigh on sterling," he pointed out.

- "If we talk about [possible] candidates [for the post of party leader and, in this situation, the post of the country's prime minister], for the pound and British government bonds, he [Streeting] would be the most preferable option: he intends to stick to budget rules, favors cooperation with the EU and does not pose a threat of further deterioration of public finances," Reuters quoted Kenneth Brue, head of corporate research for currency and debt markets at Societe Generale in London, as saying.

Bloomberg notes that Streeting is just one of the party figures likely to run for Labor leader if a formal election is held. The former British health minister represents the right wing of the party, continuing the tradition of party figures such as former Prime Minister Tony Blair and former British Ambassador to the U.S. Peter Mandelson, the agency notes.

Starmer is trying to retain his post as prime minister after nearly a quarter of his Labor Party MPs publicly called on him to resign amid the party's failure in local elections on Ma. 7. According to their results, Labor lost about 1,500 seats in local councils in the UK.

This article was AI-translated and verified by a human editor