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UK Bonds Slide as Political Uncertainty Clouds Fiscal Outlook

British government bonds declined sharply as political instability threatened Prime Minister Keir Starmer's administration. Manchester Mayor Andy Burnham emerged as a potential challenger to Starmer's leadership, prompting investor concerns about the country's economic direction. Market participants worried that a change in leadership could lead to looser fiscal policies, particularly if a more left-leaning government took control. The pound also weakened amid the political turmoil. Starmer's government emphasized security and economic resilience in recent messaging, but the possibility of internal party challenges undermined investor confidence in Britain's financial discipline. Leadership uncertainty and fears of expansionary spending policies created headwinds for UK assets.