UK long-term borrowing costs dip from 28-year high after Starmer allies back PM – as it happened

UK bond yields hit highest since 1998 this morning, before easing back as some cabinet ministers voiced support for Keir Starmer

Full story: UK borrowing costs hit highest since 1998 amid Starmer uncertainty

Politics live: Keir Starmer tells cabinet he is not resigning amid growing pressure to stand down

Chris Beauchamp, chief market analyst at investing and trading platform IG, says:

There is no clear plan for what comes next, but markets are already pricing in a new PM who will open the floodgates on spending despite the UK’s dangerous fiscal situation.

Faced with hordes of Labour MPs worried about their re-election chances as Reform surges, a new PM will find it very hard to resist calls to spend more money in order to shore up their embattled party.

We could see a blowout in longer-dated gilts if this turns into a dogfight– political, fiscal and inflationary risks will rise.

Markets tend to dislike a lack of certainty over who runs a government; the fiscal position is already fragile and likely to become worse should a left-leaning ticket prioritise spending; and that this makes inflation stickier.

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