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UK Political Turmoil Roils Gilt Markets as Starmer Consolidates Power

Britain's government faced renewed financial market scrutiny Wednesday as Prime Minister Keir Starmer moved to stabilize his position. This followed the Labour Party's weak local election results. The State Opening of Parliament proceeded with King Charles III presenting the administration's legislative agenda, though political uncertainty continues to shadow the government's economic credibility. Gilt yields had spiked sharply the previous day as investors worried leadership instability could undermine fiscal discipline under Chancellor Rachel Reeves. With over 80 lawmakers calling for Starmer's resignation, markets fretted potential policy reversals. By Wednesday, as Starmer's grip on office appeared more secure, gilt yields retreated 2 to 6 basis points. The political volatility underscores investor concerns about sustained governance as Britain navigates its fourth prime minister in four years.