Gilt Yields Fall As Starmer Vows To Stay On After Farage's Reform UK Storms To Historic Gains In 'Midterms'
Update (0800ET): After hitting 28-year highs earlier in the week, UK gilt yields are lower as UK PM Keir Starmer said he had no plans to step aside as Labour leader after early results in local elections showed Nigel Farage’s populist Reform UK racking up sweeping gains over Britain’s governing party.
Cable is also stronger against the dollar...
The Polymarket prediction platform showed punters paring bets on a Starmer departure this year, giving a 57% chance of the premier exiting by Dec. 31, down from 70% on Thursday.
UK's Milliband reportedly told PM Starmer he should consider setting out a timeline for his departure, via Times.
The sources said Miliband made the suggestion during a private meeting with the prime minister about a fortnight ago.
But, for now, Starmer is staying:
“These are really tough results — I’m not going to sugarcoat it,” Starmer told broadcasters on Friday, while resolving to stay on as prime minister until the next election.
“The voters have sent a message about the pace of change, how they want their lives improved. I was elected to meet those challenges, and I’m not going to walk away from those challenges and plunge the country into chaos.”
So far, markets have responded positively suggesting investors think the more pessimistic predictions about the outcome will probably be avoided.
Still, Bloomberg economist Dan Hanson warns that, with plenty more results to come in, the final verdict is uncertain, as is the likely reaction from Labour MPs.
Here's how to judge the results:
The risk for the economic outlook is that the local elections spark a chain of events that eventually sees Prime Minister Keir Starmer replaced by a leader who favors looser fiscal policy.
With the economy in the midst of a fresh inflationary shock and the public finances stretched, a promise of higher spending would put a new leader on a collision course with the gilt market.
“We’re proving in a big way, we can win in areas that Labour have dominated, frankly, since the end of World War I,” Farage told journalists in London on Friday.
“You’re witnessing an historic shift in British politics. This is now the most national of all parties. We’re competitive in the north of Scotland. We were competitive in Cornwall in the county elections last year. We’re competitive in every part of the country, and we’re here to stay.”
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Reform UK is on track for historic gains in the 2026 UK local elections - seizing hundreds of seats in the early counts while Labour and the Conservatives suffer heavy defeats across England.
With results from 39 of 136 councils declared overnight (roughly 28% of the vote counted), Reform UK has already gained over 300 seats - a remarkable surge for a party that had almost no local presence just a few years ago.
Labour has lost 220 seats, the Conservatives 107, while the Liberal Democrats gained 35 and the Greens 22.
Labour on the Brink in Traditional Strongholds
The scale of Labour’s collapse is stark. In areas where the party was defending seats, it has retained only 23% so far. One senior Conservative commentator noted on X that Labour is “currently losing 84% of the seats they are defending.”
Labour has already lost control of at least five councils, including long-held northern strongholds. Tameside fell after 47 years of Labour rule. Heavy losses were also recorded in Halton, Hartlepool, Redditch and Tamworth, with Reform UK making major inroads in former Labour heartlands across the North and Midlands.
Birmingham on the Brink of a Reform Takeover?
Nowhere is the drama more intense than in Birmingham, where all 101 council seats are up for election. Pre-poll surveys had Reform UK as the largest party or very close to it, with some projections putting them on 47 seats - just short of an outright majority.
A widely shared post on X claimed Reform UK is “tipped to take control of Birmingham City Council in what could become one of the biggest political upsets in modern British politics.” Local issues including a prolonged bin strike and council finances have dominated the campaign. Results from Britain’s second city are expected later today.
Across the declared councils, Reform UK is winning approximately 48% of the seats contested so far. Many authorities are heading for no overall control, creating a fragmented political map.
The Liberal Democrats enjoyed a standout result in Richmond upon Thames, taking every seat. The Greens also made solid gains.
In Scotland, counting for the Scottish Parliament election begins this morning, with first results expected around lunchtime. Polls had suggested the SNP would fall short of a majority while Reform UK was on course for a significant breakthrough. Wales is also counting today.
Political Earthquake for Starmer
These are the first major elections since Labour’s 2024 landslide victory and represent a serious test for Prime Minister Keir Starmer. Reform UK leader Nigel Farage has hailed the results as evidence of a “historic change in British politics.”
Conservative leader Kemi Badenoch faces questions about her party’s ability to stem the flow of votes to Reform on the right.
This is a developing story. More councils - including several major metropolitan boroughs - will declare throughout Friday, with the full national picture expected by Saturday.
The last word goes to @higgyboson
CV.
Completely ruined a major 126 year old political party in less than 2 years.
Became the most hated UK Prime Minister in history.
Unilaterally gave away billions of £'s of taxpayers money with no accountability required from the recipients.
Wrecked the economy.
Failed to control mass immigration, both legal and illegal.
Failed to address the problem of muslim rape gangs.
Increased welfare payments to a point where benefits now cost more than the entire income tax take.
Allowed weekly pro-Palestinian hate marches on our streets.
Consistently referred to people with concerns about the proliferation of migrant violence as "Far Right".
Promoted one of his friends to high office despite knowing he was a buddy of one of the most prolific paedophiles on the planet.
Consistently worked to reverse the result of the biggest democratic vote in British history by stealth.
Placed tax dodgers, fraudsters and CV fantasists in Ministerial posts.
Invited a known islamist terrorist to No.10 while simultaneously banning foreign commentators from the UK for merely reporting on the border fiasco.
Took two weeks to find a Royal Navy ship that actually worked.
Introduced legislation that will destroy the private rental market and create hundreds of thousands of homeless families.
Promised to build 1.5 million homes in five years despite everyone telling him it would be impossible.
Failed to help motorists and hauliers after the rise in the price of fuel caused by the war in Iran.
Continues to allow Ed Milliband to wreck the UK's energy industry with his insane Net Zero policies.
Raised the minimum wage and employers National Insurance contributions leading to thousands of job losses and businesses folding.
Introduced VAT to private school fees leading to many excellent seats of learning closing their doors.
Consistently refused to answer questions during the session in the parliamentary week set aside for this specific purpose.
Consistently failed to accept responsibility for any wrong doing, preferring to sack others instead.
Alienated "working people" while claiming to be on their side.
And the lies. The constant lies.
Failure. Failure. And more Failure.
Time to go.
