“Keir Starmer’s address to the nation hasn’t done the trick of calming bond markets,” said global financial commentator Susannah Streeter (pictured right). “There is still a sense of jitters playing out as concerns about political instability collide with inflationary fears prompted by the ongoing conflict in the Middle East.
“His speech was designed to project a ‘keep calm and carry on’ message, but the worry is that it lacks the real substance needed to keep Labour MPs on side.”
Streeter, who is also the chief investment strategist at Wealth Club, noted that a change of leadership could destabilise fiscal policy. “The concern is that a change of Prime Minister would prompt wider turmoil at the top of government,” she said.
“It could see the Treasury’s focus on adhering to fiscal rules derailed if a new guard is brought in to pacify Labour’s rank and file. Political turbulence is never a good look for a nation that needs to project stability in order to attract long-term investment.”
The implications extend beyond Westminster. Higher gilt yields tighten the government’s fiscal headroom, limiting its capacity to support households in regions facing potential job losses. Analysis from the EY Item Club identifies Humber and South Wales as areas facing significant employment pressures linked to the Middle East conflict.