---
title: "With Keir Starmer premiership on the brink, British government debt, currency and stocks fall"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/286073233.md"
description: "British government debt, currency, and stocks have fallen amid speculation over Prime Minister Keir Starmer's leadership. The yield on the 10-year U.K. government bond rose to 5.10%, while the British pound dropped 0.5% to $1.3543. The FTSE 100 index fell 0.6%. Starmer faces pressure after local election losses, with 78 Labour MPs calling for his resignation. Analysts warn that a new prime minister could lead to aggressive spending policies, increasing government borrowing costs and interest rates. Starmer insists he will remain in office despite the challenges."
datetime: "2026-05-12T09:50:25.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/286073233.md)
  - [en](https://longbridge.com/en/news/286073233.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/286073233.md)
---

# With Keir Starmer premiership on the brink, British government debt, currency and stocks fall

By Steve Goldstein

Members of the media stand outside Number 10 Downing Street (R), the home of Britain's Prime Minister Keir Starmer, ahead of a cabinet meeting in central London on May 12, 2026.

British government debt fell sharply on Tuesday, with Prime Minister Keir Starmer's insistence he will stay in office doing little to quell speculation he could face a leadership challenge.

The yield on the 10-year U.K. government bond BX:TMBMKGB-10Y, called a gilt, rose 9 basis points to 5.10%, having risen 9 basis points on Monday. Yields move in the opposite direction to prices.

The yield on the 30-year gilt BX:TMBMKGB-30Y rose 10 basis points to 5.77%, having gained 9 basis points on Monday.

The British pound (GBPUSD) fell 0.5% to $1.3543. The U.K. FTSE 100 UK:UKX stock-market index fell 0.6%, though other major European equity markets also lost ground.

Starmer is under political pressure after the Labour Party he leads suffered a heavy defeat in local elections last week, losing votes both to the Reform Party on the right and the Green Party on the left. Investors fear that any new prime minister would bring in more aggressive spending policies.

Starmer on Tuesday, after a cabinet meeting, said he would stay in office, as ministers filing out of the meeting told reporters a leadership challenge was not triggered.

Sky News reported the tally of Labour MPs calling for Starmer's resignation is now at 78.

"None of this is good in the overall picture, with U.K. bonds, which were already trading at their highest yield since 1998 before the local elections, see their yields climb even higher. This owes to concerns that whoever the party chooses to replace the PM will be fiscally to the left, endangering the credibility the PM and his Chancellor had built up over the past two years," said David Stritch, a currency analyst at Caxton.

Andrew Wishart, senior U.K. economist at Berenberg, said local elections show that Labour's biggest problem comes from Reform and not the Greens.

"Abandoning fiscal consolidation would lead to a rise in government borrowing costs that displaces any room for higher public spending and raises interest rates. To avoid this, we suspect that all of the candidates in any leadership race will recommit to fiscal sustainability," he said.

\-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-12-26 0547ET

Copyright (c) 2026 Dow Jones & Company, Inc.

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