"Markets are watching Westminster closely. Government leadership rumours surfacing before a crucial Budget reinforce the sense that the government is under strain. Investors aren't yet pricing in political instability, but they're alert to the risk that this story could return in the new year. We believe there's unlikely to be an immediate leadership challenge after the Budget - the priority will be getting through it cleanly, but this will be extremely tough after it looks like income tax rises are now almost inevitable."
"The greater risk in terms of a leadership threat comes in May, after the local elections. If Labour performs badly, the internal pressure will intensify, and at that point we would expect a full-on leadership contest. Prime Minister Starmer and Chancellor Reeves are politically intertwined. Investors see them as one fiscal partnership, the team that restored a sense of economic discipline after years of turbulence. If one of them goes, both could fall, we believe. This scenario would unsettle markets instantly."
A reported leadership rift in the UK government has left the pound holding its ground for now, while investor concern about durability grows. Health Secretary Wes Streeting denies positioning to replace Prime Minister Keir Starmer, yet speculation has reignited talk of internal tension ahead of a critical Budget on 26 November. Unease centers on potential tax rises to fill a £30 billion fiscal gap. Nigel Green of deVere Group warns markets are watching Westminster closely and that investors remain alert to political risk. He sees an unlikely immediate leadership challenge before the Budget but a heightened risk after May’s local elections, when poor Labour performance could trigger a full leadership contest and unsettle markets if the Starmer-Reeves fiscal partnership were to fracture.
Read at London Business News | Londonlovesbusiness.com
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