Starmer addresses leadership rumours amid bond market warnings
Keir Starmer has acknowledged that speculation over his leadership is “rife” amid fresh concerns that a change in Prime Minister could spark panic in the bond markets.
The PM vowed to take action on leaks and briefings coming from Downing Street over the last few months, adding that he had previously dismissed officials for sharing confidential information.
Asked if the Labour leadership speculation was “purely party political” in the context of conduct rules for advisors, Starmer replied: “No. I’m not sure I can. It seems to be pretty rife.”
Starmer said briefings from officials against Cabinet colleagues and Labour backbenchers in November were “completely unacceptable” when he was asked about the damage of political leaks during a hearing with a collection of select committee chairs.
He also vowed to find out about the source of leaks amid a Treasury inquiry into Budget stories that shared confidential details about tax and forecast plans.
Chancellor Rachel Reeves said last week she did not authorise leaks around income taxes to the Financial Times, with information presented in media reports being “inaccurate” while Starmer struck a similarly defiant tone when speaking about internal issues.
Labour issued with bond market warning
His concern around his wobbly position as Labour’s leader came as Panmure Liberum’s Simon French warned that the replacement of Starmer with a soft-leader leadership would lead to “loud echoes” of the bond market rout during Liz Truss’ mini-Budget crisis.
He said City traders were concerned that a new Labour leader would ditch fiscal rules and look to borrow more funds for greater public expenditure.
His note followed reports on the weekend that Andy Burnham was looking to return to parliament to challenge Starmer through the Manchester Mayor rubbished the claims online.
French warned the May elections could be a decisive time for the Labour leader and the government’s lenders in markets.
“The attribution of the Mini Budget remains contested – even by those entirely unconnected to the event – with Liability Driven Investment (LDI), the Energy Price Guarantee (EPG), and a Quantitative Tapering (QT) pivot all acting as exogenous factors that make 2022 an imperfect control experiment,” French said.
“The economic team surrounding a new left-wing PM may conclude with those factors unlikely to repeat next Spring, a similar market reaction is unlikely. Whilst we believe that approach would be naïve, we cannot dismiss a new administration taking this approach.”
Such a change in government could take short-term gilt yields to their highest level since 2028, pushing up borrowing costs for taxpayers.
PM vows to ‘get to the bottom’ of leaks
“I’ll get to the bottom of these leaks,” Starmer told the Liaison Committee. “They are, in any organisation, intolerable.
“I took the same action when I was head of the Crown Prosecution Service. There is a leak inquiry. It can go wherever the evidence will take it, and if it comes to a conclusion, I’ll act on it.”
He said he did not take stories on briefings against health secretary Wes Streeting, which were published in several national media outlets on the same evening, “at face value”.
Starmer was grilled by opposition leader Kemi Badenoch on the apparent Cabinet split at the time during a gruelling Prime Minister’s Questions session, with the debacle also irking a number of Labour backbenchers who had been referred to as “feral” in media reports.
“I looked at other bits of evidence to assure myself about what I was then saying publicly to the media,” Starmer said as he defended his role during months of speculation.