British Prime Minister Keir Starmer reacts to the media about the results of the local government elections at AFC Wimbledon on May 9, 2026 in London, England.
Alicia Abodunde | Getty Images News | Getty Images
British Prime Minister Keir Starmer vowed to “stand up to the big challenges” facing Britain in a make-or-break speech on Monday as pressure on his leadership mounts.
Mr Starmer has cited growth, defence, Britain’s relationship with Europe and energy demand as key issues that need to be addressed immediately in a bid to persuade his Labor colleagues to stay in office.
“In order to meet the challenges facing our country, incremental change alone is not the answer,” he said, acknowledging that “some people are unhappy with me” and admitting he had “doubts”.
“I know I have to prove them wrong, and I will do that,” he told a crowd of supporters.
This comes after the ruling Labor Party suffered a crushing defeat in last week’s local elections. Although the vote had no impact on British national governance, it was seen as an important reflection of public sentiment towards the ruling party and its leaders.
The result has led to calls for the Prime Minister to immediately resign from Labor MPs, with some thought to be considering potential leadership challenges.
Mr Starmer insists he will lead Labor in the next general election in 2029, but speculation over a change in prime minister has increased pressure on the government’s already high borrowing costs.
“There will be a sense of hope and a sense of urgency and we will know which side we are on,” Starmer said on Monday, adding: “People need hope. We will rise to big challenges and make big claims.”
Challenges to worker leadership
Starmer on Monday also promoted the government’s commitment to deepening ties with the European Union.
Mr Starmer criticized Nigel Farage, leader of the right-wing Reform UK Party, which won a big victory in last Thursday’s local government elections, and his Conservative rivals, saying those parties are “defined by severing ties with Europe”.
“This Labor government will be defined by rebuilding our relationships and putting Britain at the heart of Europe. So we will be stronger in every way, including our economy, our trade and our defence,” Starmer said, pledging to forge closer links with the continent, particularly for young people who want to work, live or study in the EU.
About two hours after Starmer’s speech, Labor MP Catherine West, who has been leading the call for a leadership election, told the BBC that she had informed Downing Street of her intention to gather the names of her colleagues to set a date for Starmer to step down.
As of 8pm on Sunday, 42 Labor MPs had called for Mr Starmer to resign.
West’s announcement prompted a sell-off in British bonds, with yields rising about 7 basis points to 4.98% by 7:20 a.m. ET.
Angela Reiner, Mr Starmer’s former deputy, is also a potential leadership candidate. He told Sunday’s X program: “What we’re doing isn’t working. It needs to change. This may be Labor’s last chance.”
Other potential challengers include Health Secretary Wes Streeting and Manchester Mayor Andy Burnham, but he would need to be elected to Parliament before he can stand for leadership.
Former Deputy Prime Minister of the Labor Party, Angela Reiner, speaks at the Labor Party’s North West Regional Conference at the Titanic Hotel in Liverpool, England, on January 25, 2026.
Ryan Jenkinson Getty Images News | Getty Images
gold leaf in focus
Financial markets will be closely monitoring the leadership’s bid and Britain’s borrowing costs following the speech.
Last Friday, the benchmark 10-year Gilt yield fell to 4.904% after Starmer insisted he would not resign as the magnitude of Labour’s local election defeat became clearer. Yields rose four basis points to 4.957% after Mr Starmer finished his speech on Monday morning, little changed from the situation before his speech.
Mr Pickering said Britain’s borrowing costs were the highest in the G7 group of developed economies, reflecting concerns about the country’s persistent inflationary pressures and weak economic growth. The economic fallout from the Iran war is exacerbating the problem.
“In terms of specific developments around short-term politics, the simple fact that bond yields fell in the UK on Friday but not elsewhere suggests there is still a political element,” Peel Hunt chief economist Callum Pickering told CNBC on Monday.
“Even if you can filter out the political noise, yes, bond yields will be higher than they were at the beginning of the year, but they’ll probably be lower, say around 10 to 15 basis points.”
