--- title: "Long-Dated U.K. Borrowing Costs Jump to Multiyear High as Pressure Mounts on PM Starmer — Update" type: "News" locale: "en" url: "https://longbridge.com/en/news/286075677.md" description: "Yields on 30-year U.K. government bonds reached their highest level since 1998, while 10-year borrowing costs also surged, amid increasing pressure on Prime Minister Keir Starmer to resign following significant local election losses. Starmer faces calls from 75 Labour lawmakers to step down, with concerns that a left-leaning successor could lead to higher government spending and worsen public finances. This political uncertainty is negatively impacting the pound and gilt yields, as investors demand a higher risk premium on U.K. assets." datetime: "2026-05-12T10:01:41.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286075677.md) - [en](https://longbridge.com/en/news/286075677.md) - [zh-HK](https://longbridge.com/zh-HK/news/286075677.md) --- # Long-Dated U.K. Borrowing Costs Jump to Multiyear High as Pressure Mounts on PM Starmer — Update By Renae Dyer and Miriam Mukuru Yields on 30-year U.K. government bonds rose to their highest since 1998 and sterling fell Tuesday as fiscal concerns mounted on the prospect of Prime Minister Keir Starmer stepping down. Ten-year U.K. borrowing costs also jumped to their highest since 2008. Keir Starmer resisted growing pressure to resign in a crucial meeting with cabinet ministers. Starmer told his cabinet that the Labour Party has a process for challenging a leader and this hasn't been triggered, according to media reports. "The country expects us to get on with governing," he said. However, Starmer has faced mounting calls from Labour lawmakers to step down after the party suffered significant losses in last week's local elections. By Monday night, 75 of Labour's 403 lawmakers had publicly called on Starmer to make way for another leader. Support from 81 lawmakers is required to officially trigger a leadership contest. Some investors are concerned that should a more left-leaning Labour leader replace Starmer, this could lead to increased government spending and worsen public finances. Such a scenario would likely push gilt yields even higher and weaken sterling, analysts said. "A leadership contest whether immediate or more drawn out will add to political uncertainty in the near term, which is negative for the pound and gilts. The risk of a bigger selloff will increase if Labour shifts toward the left," Lee Hardman, senior currency analyst at MUFG, said. Yields on 30-year U.K. government bonds, known as gilts, rose to a multiyear high of 5.813%, surpassing last week's peak, according to LSEG data. Ten-year gilt yields rose more than 10 basis points to a peak of 5.135%, Tradeweb data showed. Bond markets are "frazzled by concerns that a different U.K. Prime Minister might take a different view on borrowing, relaxing fiscal rules or extending them, and may introduce more legislation that the market would view as potentially damaging to economic growth," said Anna Macdonald, investment strategy director at Hargreaves Lansdown. "This would mean that investors, of which 25-30% are overseas buyers of U.K. government bonds, demand a higher risk premium," she said. Sterling fell to a near three-week low against the euro at 0.8697 pounds and a one-week low of $1.3499 against the dollar in early European trade, according to LSEG data. "In the markets, the focus seems to be shifting less and less on whether, and more on when, Starmer will have to step down," Commerzbank foreign-exchange analyst Michael Pfister said in a note. What matters most are the views of any successor, Pfister said. Even though Starmer has become unpopular, he has aimed to balance the budget and potential successors might see things differently, he said. If there is a U.K. leadership change, it risks a shift toward left-wing policies which could favor higher public spending and potentially more government borrowing, Berenberg economist Andrew Wishart said in a note. That would put a risk premium on U.K. assets, he said. Write to Renae Dyer at renae.dyer@wsj.com and Miriam Mukuru at miriam.mukuru@wsj.com (END) Dow Jones Newswires May 12, 2026 05:52 ET (09:52 GMT) Copyright (c) 2026 Dow Jones & Company, Inc. ### Related Stocks - [FXB.US](https://longbridge.com/en/quote/FXB.US.md) - [IGLT.UK](https://longbridge.com/en/quote/IGLT.UK.md) - [8306.JP](https://longbridge.com/en/quote/8306.JP.md) - [MUFG.US](https://longbridge.com/en/quote/MUFG.US.md) - [LSEG.UK](https://longbridge.com/en/quote/LSEG.UK.md) - [TW.US](https://longbridge.com/en/quote/TW.US.md) - [CBK.DE](https://longbridge.com/en/quote/CBK.DE.md) - [CBK.NA](https://longbridge.com/en/quote/CBK.NA.md) ## Related News & Research - [AllianzGI, Royal London stick with UK gilts, bet Starmer rivals will not forget 2022 rout](https://longbridge.com/en/news/286592457.md) - [CNBC daily open: Leadership challenge swirls around Starmer](https://longbridge.com/en/news/285670762.md) - [Britain has already hit its taxable limit – there is no more revenue to be squeezed](https://longbridge.com/en/news/286953411.md) - [UK Labour Party says it will let Burnham run for parliamentary seat](https://longbridge.com/en/news/286596231.md) - [UK parliamentary election, key to possible Burnham leadership bid, set for June 18](https://longbridge.com/en/news/287089372.md)