UK's Labour Party Suffers Heavy Losses to Reform UK in Local Elections as Starmer Vows to Continue

May 8, 2026

Britain's ruling Labour Party suffered major defeats in local council elections on Friday, with hundreds of councillors losing seats and many councils changing hands to Nigel Farage's anti-immigration Reform UK party and the Green party. Prime Minister Keir Starmer acknowledged the results were "really tough" but vowed to complete his five-year term, stating the local outcomes would not affect Westminster's composition. The electoral losses intensified speculation about Starmer's leadership, with backbench Labour MPs reportedly planning to demand his resignation and potential replacements including Health Minister Wes Streeting, Angela Rayner, and Andy Burnham being discussed. Financial markets responded positively to Starmer's commitment to stay, with 10-year gilt yields falling 6 basis points to 4.888%, reversing earlier volatility when 30-year bonds had reached their highest levels since 1998 at 5.8% amid coup rumors.

Labour Party's Heavy Local Election Losses and Starmer's Response

▪Keir Starmer labeled the local election outcome as "really tough" when speaking to reporters on Friday.

Bond Market Reaction and Gilt Yield Movements

▪The 10-year U.K. government bond yields moved downward in response to Keir Starmer's insistence that he would not step down from his post.
▪U.K. government bond yields surged in July of last year after Rachel Reeves was seen crying in parliament.
▪The 30-year U.K. government bond traded at 5.8% earlier this week.
▪The U.K. has the highest government borrowing costs in the G7.
▪The yield on 20-year U.K. government bonds lost 9 basis points on Friday.
▪U.K. 10-year, 20-year, and 30-year government debt yields are above the 5% threshold.
▪The yield on the 2-year U.K. government bond shed 5 basis points on Friday.
▪Gilt yields surged to their highest levels since 2008 earlier this week amid reports of a planned coup against Keir Starmer.
▪The 30-year U.K. government bond held firm at 5.628% on Friday morning.
▪30-year U.K. government bond borrowing costs touched their highest level since 1998 earlier this week.
▪Yields on benchmark 10-year U.K. government bonds were almost 6 basis points lower at 4.888% by 10:38 a.m. in London on Friday.
▪The 30-year U.K. government bond was at 5% three months ago.

Political Instability and Potential Leadership Change Concerns

▪The local election results raised questions about Keir Starmer's future as prime minister.
▪Rachel Reeves' role in Keir Starmer's cabinet was in jeopardy in July of last year.