But can that last? There\u2019s no shortage of political flashpoints over coming weeks \u2013 from the fallout of this week\u2019s by-election in Gorton and Denton, to challenging local elections on 7 May. Nationally, Labour are polling 18% according to YouGov, down from around 35% at the 2024 general election. Keir Starmer\u2019s position as Labour Party leader \u2013 and therefore as Prime Minister \u2013 still appears vulnerable.<\/p>\n
That all threatens to overshadow next Tuesday’s \u201cSpring Forecast\u201d. UK Chancellor Rachel Reeves will be keen to avoid a re-run of last year\u2019s statement, where financially modest but politically seismic welfare changes sparked a huge political backlash and ultimately U-turns.<\/p>\n
Fortunately for the Treasury, the Office for Budget Responsibility\u2019s forecasts are likely to be little changed \u2013 certainly nothing that\u2019s likely to drastically alter the comfortable levels of \u201cheadroom\u201d available under the fiscal rules. Next week’s announcement is likely to be low-key.<\/p>\n
So what happens if leadership noise resurfaces? A few short-lived gilt sell-offs last year offer a clue to the financial market reaction. A new prime minister would likely mean a new chancellor (finance minister). A new chancellor might mean new fiscal rules. And new fiscal rules would presumably herald more borrowing and gilt issuance, potentially complicating the Bank of England\u2019s rate-cutting cycle. UK yields likely go higher again if those risks resurface.<\/p>\n
That may well be the short-term playbook, but is it the right reaction? The reality looks more nuanced.<\/p>\n
For one thing, Labour Party rules don\u2019t make it easy to change leader. 20% of Labour MPs need to back a rival candidate to trigger a contest. That\u2019s 81 lawmakers. Even if that number push for a change in leader, can they all agree on a single nominee?<\/p>\n
In the event a Labour leadership challenge is triggered, though, we think there are four questions we\u2019d need to answer:<\/p>\n","protected":false},"excerpt":{"rendered":"But can that last? There\u2019s no shortage of political flashpoints over coming weeks \u2013 from the fallout of…\n","protected":false},"author":2,"featured_media":446673,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[59,57,58,50,56,54,55],"class_list":{"0":"post-446672","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-kingdom","8":"tag-gb","9":"tag-great-britain","10":"tag-greatbritain","11":"tag-news","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/446672","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=446672"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/446672\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/446673"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=446672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=446672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=446672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}