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Keir Starmer’s speech ‘fails to reassure bond markets’ as yields rise higher
UK government borrowing costs are creeping a little higher after a morning of rising political jitters.
The yield, or interest rate, on UK 30-year bonds is now up 8 basis points (0.08 of a percentage point) at 5.65%, up from 5.57% on Friday night. That’s higher than just before Keir Starmer’s speech this morning, when they were up about 5bps.
Benchmark 10-year bond yields have risen higher too – now up 6bps, having been 4bps higher earlier in the morning.
Rising bond yields indicate that bond prices have dropped, suggesting less appetite for UK debt and pushing up the cost of borrowing.
These increases comes as Labour MP, David Smith, has said Starmer should set a timetable for his departure and that the government neeed “to act faster, and be more radical”.
Update: Labour MP Catherine West, who announced a challenge to Starmer over the weekend, has now said she wants the prime minister to set a timetable of September for an orderly departure.
Susannah Streeter, chief investment strategist at Wealth Club, says there are concerns in the bond markets that a change of Prime Minister would prompt wider turmoil at the top of government, and less focus on fiscal rules.
Streeter writes:
“Keir Starmer’s address to the nation hasn’t done the trick of calming bond markets. 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.
Ten-year gilt yields have crept higher, nudging 5% once more, while longer-dated government debt remains hovering above 5.6%. They have not been at this level for a sustained period since the late 1990s.
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Over 5m UK workers hit by employment law violations
Priya Bharadia
At least one in seven UK workers had their employment rights violated between 2023 and 2025, a report by University College London suggests.
Researchers from UCL found that at least 5.4 million workers had faced clear violations of UK employment law, including being paid below the national minimum wage, charged work-finding fees, and not receiving payslips or contracts.
The team spoke to representative sample of more than 4,000 UK workers about their experiences at work over the two year period. They found that 6.1% were paid below the national minimum wage, a rate four times higher than the previous estimate of 1.6% published by the Office for National Statistics.
Low-income workers were found to be particularly vulnerable, with the rate of violations rising to more than one in four (25.6%) for employees from minority-ethnic backgrounds or in non-traditional jobs.
Approximately 26 to 28 million people, or 70% of the workforce, have experienced at least one of a broader range of harms, also including potentially illegal or otherwise damaging work practices, according to the researchers. These other negative impacts included working extra hours unpaid, physical injuries in the workplace, and bullying or harassment.
“Not all breaches of the law are deliberate and not all harmful behaviour is illegal,” said UCL professor Ella Cockbain, who co-led the project. “But the sheer scale of problems identified suggests widespread non-compliance and other harms at work.”
The report recommended the government improve communications about workers’ rights, and create easier and safer methods for reporting abuses, including multi-lingual communications and safeguards for migrant workers.
Cockbain added:
“The received wisdom that there are a few ‘bad apples’ among employers is simply not tenable anymore. We found problems across the system, and rights on paper did not necessarily translate into rights in practice. The results call for concerted action to improve worker protections and their enforcement.”
Since the research period, new legislation under the Employment Rights Act, which came into force last month has improved a number of conditions for employees and workers, including guaranteed hours and payment for short-notice cancellation of shifts, a ban on fire-and-rehire in most cases, paternity and parental leave from day one and stronger trade union rights.
The research was conducted by UCL in collaboration with the University of Gloucester, and co-funded by the Department for Business and Trade and the Economic and Social Research Council. It was published by the newly established Fair Work Agency.
Elsewhere in the markets, India’s stock market fell sharply today after the country’s prime minister called on citizens to conserve fuel, work from home where possible and cut back on travel and imports.
Narendra Modi made the call to ease pressure on the country’s foreign exchange reserves, as the Iran war causes economic turbulence.
Investors took it badly, though, with India’s Sensex falling by 1.7% today.
Shumita Deveshwar of City consultancy TS Lombard say the comments are “a stark reminder of the macro risks India faces from a prolonged conflict”.
A shift to the left for the Labour party would trigger “at least a temporary period of pound selling”, predicts Lee Hardman, currency expert at Japanese bank MUFG.
So far today, though, the pound is flat against the euro at €1.156, and down just 0.15% against the US dollar at $1.361.
1o-year gilt yields hit 5%
UK 10-year bond yields have just hit the 5% milestone.
That’s a jump of eight basis points (0.08 of a percentage point), to the highest level since last Wednesday, approaching their highest level since the 2008 financial crisis.
Enrique Díaz-Alvarez, chief economist at global financial services firm Ebury, argues that the pound has weathered the results of the May local elections in the UK remarkably well.
With sterling down just 0.2% so far today, Díaz-Alvarez argues that the Labour bloodbath was roundly expected and priced in by markets, adding:
“Investors are betting that Labour’s overwhelming defeat will not end Starmer’s premiership just yet, but pressure on the prime minister looks set to intensify in the coming days, with a number of backbenchers already calling for his resignation.
“As this is written, no potential rivals on his left have launched a formal bid to replace him, although there are murmurs that the likes of Rayner and Streeting are privately weighing their options.
“A potential lurch to the left is what markets fear most, as this could mean higher taxes, heavier gilt issuance and a broader fiscal risk premium baked into UK assets.
Shorter-dated UK government bonds, which are more sensitive to short-term inflation risks, are also weakening today.
This has pushed up the yields on two-year, and five-year, gilts by around 8bps today – bigger rises than for US shorter-dated bonds.
And still UK bond yields creep higher.
The 30-year bond yield is now up 9.3 basis points (0.093 of a percentage point), to 5.67%.
That takes it nearer to the 28-year high of 5.78% hit last week, amid uncertainty about the future of Keir Starmer’s government.
Keir Starmer’s speech ‘fails to reassure bond markets’ as yields rise higher
UK government borrowing costs are creeping a little higher after a morning of rising political jitters.
The yield, or interest rate, on UK 30-year bonds is now up 8 basis points (0.08 of a percentage point) at 5.65%, up from 5.57% on Friday night. That’s higher than just before Keir Starmer’s speech this morning, when they were up about 5bps.
Benchmark 10-year bond yields have risen higher too – now up 6bps, having been 4bps higher earlier in the morning.
Rising bond yields indicate that bond prices have dropped, suggesting less appetite for UK debt and pushing up the cost of borrowing.
These increases comes as Labour MP, David Smith, has said Starmer should set a timetable for his departure and that the government neeed “to act faster, and be more radical”.
Update: Labour MP Catherine West, who announced a challenge to Starmer over the weekend, has now said she wants the prime minister to set a timetable of September for an orderly departure.
Susannah Streeter, chief investment strategist at Wealth Club, says there are concerns in the bond markets that a change of Prime Minister would prompt wider turmoil at the top of government, and less focus on fiscal rules.
Streeter writes:
“Keir Starmer’s address to the nation hasn’t done the trick of calming bond markets. 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.
Ten-year gilt yields have crept higher, nudging 5% once more, while longer-dated government debt remains hovering above 5.6%. They have not been at this level for a sustained period since the late 1990s.
Mobile users cry foul over price rises
Mark Sweney
The telecoms regulator has received more than 100,000 complaints from O2 and Sky mobile customers angry over the introduction of surprise price rises.
Ofcom said that the issue of mid-contract price rises foisted on mobile customers, which has resulted in an exodus of customers and provoked an angry response from the government, fuelled the first quarterly increase in complaints about services by the UK’s major telecoms companies for two-and-a-half years.
Complaints about O2, the UK’s second biggest mobile operator with 12.5m consumer customers, more than tripled quarter-on-quarter in the first three months of the year.
The company, which is owned by Virgin Media O2, faced a backlash in October when it announced that mobile bills would rise by £2.50 a month for all customers, the equivalent of £30 a year, from last month.
This is 70p, or 40%, more than the £1.80 increase customers were informed of when they initially signed up to their contracts.
Ofcom said that the rate of complaints about O2 soared from just two per 1,000 customers in the fourth quarter last year to seven per 1,000 customers in the first three months this year.
This works out to almost 87,000 complaints, based on O2’s consumer customer base, and made the mobile network the most-complained about by some distance in Ofcom’s report.
The average across the seven mobile operators tracked by Ofcom was a complaint level of three per 1,000 customers.
The move by O2 sparked a rebuke from the chancellor, Rachel Reeves, and Liz Kendall, the technology secretary.
A customer backlash saw O2 lose 165,000 customers in the fourth quarter last year, with the company attributing about 110,000 of those directly to price increases.
Complaints to Ofcom about Sky Mobile, which is estimated to have almost 4m customers, almost doubled in the latest quarterly report.
Sky received five complaints per 1,000 customers, up from three per 1,000 in the fourth quarter, which works out to almost 20,000 complaints to Ofcom.
At the beginning of the year Sky announced that most of its mobile customers would see their monthly bill increase by £1.50, an annual increase of £18 a year, with the price rise coming in to force from Valentine’s Day.
The company said that it was the first mid-contract price rise it had implemented for mobile customers in more than seven years.
Last January, Ofcom introduced new rules banning mid-contract price rises linked to inflation, and said that telecoms companies must tell customers up front in “pounds and pence” about any future price rises.
“It is disappointing to see an increase in customers complaints during this quarter, especially following a sustained period of decreases in the complaints we received about telecoms companies,” said Cristina Luna-Esteban, Ofcom’s director of consumers and retail markets. “However, a main driver of these complaints appears to be unexpected mid-contract price rise announcements for some mobile customers in the Autumn of 2025.”
XTB: Bond market calm after ‘no knockout blow’ against Starmer
The UK bond market is “relatively stable” after Keir Starmer came out fighting this morning, reports Kathleen Brooks, research director at XTB.
She explains:
Although the PM faced challenges to his leadership over the weekend, there has been no knockout blow, and so far on Monday, the markets are calm, yields are moderately higher, and the pound remain above $1.36, even though the dollar is higher on a broad basis today.
For now, it looks like the market is not taking Angela Rayner’s proposal for how to reinvigorate the economy and Labour’s chances seriously. She doesn’t seem to grasp policy trade-offs, for example, she says that creating jobs for young people can go hand in hand with a higher minimum wage. Although the polls give a damning verdict on this government’s track record so far, the markets are clearly willing to ignore the internal fighting going on in the Labour party this week.
The relatively mild reaction in the bond market, 10-year Gilt yields are higher by 4bps, and it remains below 5%, suggests that traders do not believe that the threat to Keir Starmer will materialise. It would need a bigger blow to send yields higher, at this stage. If Starmer can get over this challenge, then the focus will go back to the data: can the economy grow, and can the public debt remain stable? If those things change, potentially because of a new leader, then the Gilt market will react.
There’s little reaction in the bond markets to Keir Starmer’s make-or-break speech, in which he pledged to fight any challenge to his leadership, and promised a new direction on Europe.
The yield, or interest rate, on 30-year UK bonds is now up around 6.7 basis points, up from 5.6bps at the start of the speech.
Ten-year bond yields are up 5bps, up from 4.3% before Starmer took to the lecturn.
These moves shows that bond prices slipped slightly during the speech, with borrowing costs still higher on the day.
E.ON acquires British energy supplier OVO
In the energy world, Germany’s E.On has agreed to buy rival Ovo to create one of Britain’s largest suppliers.
The deal brings together two of the UK’s larger energy suppliers.
In the UK, E.On serves nearly one in seven households and businesses, while Ovo has four million home energy customers.
E.On says existing tariffs will be honoured, and service will continue unchanged.
Chris Norbury, CEO of E.ON UK, says the deal will create a retailer with the capability, the technology and the customer base to make “new energy work for everyone”.
Norbury explains:
“For decades the UK energy system focused too much on those upstream. Now is our opportunity to change that. Solar, batteries, EVs and a retailer built to orchestrate. That is what this deal is about: customers in control and new energy that works for everyone.”
Chris Houghton, CEO of OVO, says:
“The energy market has fundamentally changed in recent years. OVO was founded to challenge the status quo, and we’ve built a strong retail business focused on delivering for customers and supporting the transition to cleaner energy.
“As the market has evolved, scale and access to significant long-term capital for the energy transition have become non-negotiable. Following a thorough review, we believe this decision gives the business the strongest footing for the future.
The GMB union have welcomed Keir Starmer’s decision to nationalise British Steel from its Chines owners, Jingye.
Charlotte Brumpton-Childs, GMB National Secretary, said:
“Unions have long known Jingye will not negotiate in good faith.
“This legislation will cover the whole steel industry – it isn’t specifically for British Steel but it is what will protect it from foreign owners.
“British Steel is a nationally strategic asset, it is right the Government does everything in its power to secure its long term future.
“GMB welcomes this decisive and timely intervention by the Government which will protect one of the UK’s most important industries.”
Starmer confirms nationalisation of British Steel
During his leadership reset speech, Keir Starmer has confirmed that the government will nationalise British Steel.
The PM describes steel as “the ultimate sovereign capability”, arging that strong nations in today’s world need to make steel.
And he declares:
I can announce that legislation will be brought forward this week to give the government powers [subject to a public interest test], to take full national ownership of British Steel.
‘This week’ suggests it will be part of the new legislative programme laid out in the king’s speech on Wednesday.
British Steel employs 3,500 people at its plant in Scunthorpe, and came under government control last April amid fears that its owner, Jingye, was planning to shut down the site.
Bank of England policymaker Megan Greene has said it is worth waiting “a little while” to see how the Iran war unfolds before deciding whether to raise interest rates.
Greene, one of the more hawkish members of the Bank’s monetary policy committee, has told Bloomberg’s Odd Lots podcast that the UK faces ‘upside’ risks on the outlook for inflation.
But, she suggests, it is better not to rush a decision on raising rates, until the ‘progression’ of the war is clearer.
She says:
“It’s worth waiting for a little while to see what happens with the progression of this war and therefore see what we can infer about how it will propagate through the economy before we make a move.”
“We’ve now had a negative supply shock, an energy shock, and that stands to push inflation up and growth down, which is a terrible situation for a central banker to be in.”
Keir Starmer is about to give a crunch speech, as pressure on the PM rises – my colleague Andrew Sparrow will be live-blogging it here:
European stock markets are broadly lower in early trading, as the deadlock over the Middle East conflict worries investors.
France’s CAC 40 index is down 0.75%, while Germany’s DAX has lost 0.2%.
In London, though, the FTSE 100 is up 29 points or 0.3%, with banks and oil companies among the risers.
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