--- title: "Starmer Vows \"Never to Resign\": UK Bonds Rebound as Market Bets \"Worst-Case Scenario\" Has Passed" type: "News" locale: "en" url: "https://longbridge.com/en/news/285740714.md" description: "Amid Labour's crushing defeat in local elections and the Reform Party's sudden rise, UK Prime Minister Keir Starmer clearly stated he would \"never resign,\" successfully stabilizing market sentiment for the time being. UK gilt yields fell in response, and the pound rebounded, as investors believed the worst-case scenario of \"Starmer stepping down and a shift toward fiscal easing\" had been temporarily ruled out. However, the risks of political fragmentation and loosening fiscal discipline have not been substantially alleviated" datetime: "2026-05-08T14:15:31.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/285740714.md) - [en](https://longbridge.com/en/news/285740714.md) - [zh-HK](https://longbridge.com/zh-HK/news/285740714.md) --- # Starmer Vows "Never to Resign": UK Bonds Rebound as Market Bets "Worst-Case Scenario" Has Passed Preliminary results from UK local elections show a significant increase in seats for the Reform Party, with both Labour and the Conservatives losing ground, further fragmenting the political landscape. Although Prime Minister Starmer explicitly stated he would not resign, temporarily stabilizing the bond market, market concerns have not dissipated. On May 8, Bloomberg reported that with vote counting completed in about one-third of local councils in England, the Reform Party gained a net of over 300 seats, while Labour lost a net of over 200 seats, approaching half of the seats it was defending. **Starmer admitted the results were "very difficult," but emphasized he would not step down and would continue to lead the Labour Party until the next general election.** The market reacted quickly. The yield on UK 30-year government bonds fell by 8 basis points to 5.55%, and the pound rose 0.5% against the US dollar to $1.3616. **This means the worst-case scenario previously feared by investors—"Starmer stepping down and Labour shifting toward fiscal easing"—has been temporarily ruled out.** However, although the market has gained temporary respite, the core issues facing UK assets have not been substantially alleviated. The rapid rise of the Reform Party, growing internal skepticism within Labour, and the renewed visibility of fiscal expansion risks mean that political and fiscal uncertainty in the UK continues to accumulate. ## Rapid Expansion of Reform Party Continues to Loosen UK's Traditional Two-Party Structure The results of this local election further confirm deep-seated changes in the UK's political structure. The Reform Party not only made breakthroughs in traditional Conservative constituencies but also began to encroach on areas long dominated by Labour, taking control of the Newcastle-under-Lyme City Council and winning the London Borough of Havering for the first time. Speaking in London on Friday, current Reform Party leader Nigel Farage said, "You are witnessing a historic shift in British politics." **The Conservative Party suffered a heavy blow, losing more than a quarter of its seats; the Green Party nearly doubled its seats, and the Liberal Democrats also recorded gains.** John Curtice, Professor of Politics at the University of Strathclyde, stated, "The past few hours have fully proven and demonstrated the fragmentation of British politics." Against the backdrop of worsening local election results, the market briefly worried about potential leadership turmoil within the Labour Party. Prime Minister Starmer promptly made a public statement, saying he would not resign and would not allow the UK to "descend into chaos." This statement quickly stabilized market sentiment, ending the previous continuous rise in UK 30-year government bond yields. Earlier this week, the yield had briefly touched its highest level since 1998. Gordon Shannon, fixed income portfolio manager at TwentyFour Asset Management, pointed out that Starmer's statement "bought him time," but whether he can hold on until the next general election remains highly uncertain. ## What the Market Truly Fears Is a Potential Loosening of Fiscal Discipline The core driver of the recent volatility in UK asset prices is not the election results themselves, but the direction of fiscal policy. Investors are concerned that **if Labour shifts toward more aggressive fiscal spending under election pressure to win back lost voters, long-term financing costs could rise further, given the current inflationary pressures and limited fiscal space in the UK.** Bloomberg economists Dan Hanson and analyst Antonio Barroso warned that these local elections could trigger a chain reaction in politics. If Starmer is replaced in the future by a new leader more inclined toward fiscal easing, the contradiction between UK fiscal policy and the bond market could intensify further. ### Related Stocks - [L100.UK](https://longbridge.com/en/quote/L100.UK.md) - [FXB.US](https://longbridge.com/en/quote/FXB.US.md) - [HUKX.UK](https://longbridge.com/en/quote/HUKX.UK.md) ## Related News & Research - [CNBC daily open: Leadership challenge swirls around Starmer](https://longbridge.com/en/news/285670762.md) - [INSIGHT-Farage's Reform sets sights on Scotland and Wales in battle for Britain](https://longbridge.com/en/news/285182377.md) - [UK MEDIA: LABOUR HAS LOST 296 LOCAL COUNCIL SEATS (OF APPROX 5000 CONTESTED) WITH 20% OF VOTE COUNTED; REFORM GAINS 447, CONSERVATIVES LOSE 199](https://longbridge.com/en/news/285723309.md) - [UK's Starmer vows to 'listen to voters' after election drubbing](https://longbridge.com/en/news/285814599.md) - [Labour scrambles to defuse tensions over Heathrow third runway](https://longbridge.com/en/news/285796994.md)