Up next in 10
Even by the standards of this government, this week has been extraordinarily chaotic. Upwards of 100 MPs have lost confidence in Keir Starmer, Wes Streeting looks poised to make a challenge, and Angela Rayner and Andy Burnham lurk in the wings.
In this instalment of Week in Business, City AM Editor-in-Chief Christian May digs into the carnage that awaits the economy, the markets, and the British public.
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0:01
[sighs]
0:05
>> It's going to be absolutely bloody
0:07
chaotic. Welcome to the week in business
0:09
with me, Christian May.
0:14
Okay, where to begin?
0:17
Chaos in government, chaos in the Labour
0:20
Party, meaning chaos for the country,
0:22
without a doubt. Uh let's look at how we
0:25
got here, then what's going on,
0:27
and what it might mean.
0:29
We got here, I guess,
0:31
uh almost painfully, inevitably. Uh
0:36
yes, the local elections served as some
0:39
sort of catalyzing moment, but
0:41
it's worth reflecting that
0:43
clearly a number of Labour MPs, well,
0:46
many, at least 100 or so at this stage,
0:49
uh have concluded that Keir Starmer is
0:52
not up to it, that he's not up to the
0:55
job personally, that his government is
0:58
low on achievements, and um
1:01
beaten up by scandal and U-turn and
1:05
policy mistakes, and they've had enough
1:07
of it.
1:08
And
1:09
we now have a situation where it looks
1:12
like, as uh as I sit here and talk to
1:14
you, uh Wes Streeting will
1:18
today seek to put his name
1:21
uh on the door of number 10.
1:23
But in doing so,
1:25
uh he'll trigger movement from other
1:28
people in the Labour Party.
1:30
Likely Angela Rayner, uh maybe uh Al
1:34
Khan, the uh Armed Forces Minister.
1:37
Uh who knows who else might fancy having
1:40
a go. As for Andy Burnham,
1:42
well, I mean,
1:44
he's
1:45
he's not in the game. He doesn't have a
1:47
parliamentary seat. Big debate about
1:49
whether Labour will change the rules of
1:50
their leadership elections, try and give
1:52
him time to come in, but it's not a
1:53
given. Can't just decide to return to
1:56
Parliament. You have to fight a
1:57
by-election and uh Labour might lose
1:59
this.
2:00
One other name on any likely ballot,
2:02
Keir Starmer. He says, at least for now,
2:05
that he'll absolutely fight and there is
2:07
a world in which he wins.
2:10
It's going to be
2:11
an extraordinary
2:13
mess. This from the party who won an
2:16
election on the simple pledge to end the
2:19
carousel of chaos, to return the
2:22
grown-ups to the room. That in itself
2:24
goes
2:25
to the heart of of why Labour have
2:26
struggled so much in government.
2:30
With no governing plan, no reform
2:33
agenda, no philosophy really beyond
2:36
being better at being in government than
2:39
the Tories. And after 14 years and
2:41
multiple prime ministers and divisions
2:44
and rows, of course the Tories were well
2:45
out of steam.
2:47
But Keir Starmer has nobody to blame for
2:49
this mess but himself. He has proven to
2:52
be inadequate
2:54
and incapable of
2:58
delivering the kind of policy agenda,
3:01
whatever your flavor of politics, I
3:03
think people would conclude that that
3:05
Keir Starmer has just not got the touch.
3:08
So, here we are, a Labour leadership
3:11
challenge.
3:12
The very whiff of it spooking the
3:15
markets, spooking international
3:17
investors, spooking the bond market and
3:19
with good reason. Now, you look at the
3:22
yield on those gilts, be it 10-year,
3:25
30-year,
3:26
we're way beyond Liz Truss territory,
3:28
but it's it's been like that for a
3:29
while. We're in an elevated condition
3:31
and there are multiple reasons, not
3:33
least the UK's outsized exposure to the
3:35
inflationary impacts of the Iran war,
3:38
the likelihood of further interest
3:39
rates.
3:40
But we're now going to enter this period
3:42
where the Labour party test strips off
3:43
itself two years into their governing
3:46
project, backed by an enormous majority
3:49
with very little to to for it
3:51
and no one to blame but the person who
3:54
for now resides at the top. That's Keir
3:56
Starmer. So, a Labour a Labour
3:58
leadership election will whip up
3:59
Westminster into a great frenzy, of
4:01
course it will.
4:02
What does it mean for the country? Well,
4:04
put simply, that depends on who emerges
4:07
as a winner.
4:08
Uh Wes Streeting is seen
4:11
as to the right of the Labour Party in
4:14
as much as there is a right wing of the
4:15
Labour Party, what you might used to
4:17
have called a Blairite. Um but that's
4:19
not a wildly popular position among
4:22
Labour Party members.
4:23
Uh Andy Burnham is something of a
4:24
darling. I don't know why, by the way.
4:26
I've never quite been able to put my
4:28
finger on that. He was a mediocre health
4:29
secretary who's tried and failed in the
4:31
past to
4:33
take the Labour leadership and has,
4:35
uh you know, been a good vibes-based
4:37
mayor of Manchester, I suppose, but
4:39
running Manchester
4:41
ain't the same as running the country.
4:43
Anyway, for now, he's off the pitch.
4:46
Angela Rayner,
4:47
I think uh would well, there's no doubt
4:51
about it.
4:52
If she emerged as as a winner and as a
4:54
prime minister, despite the compelling
4:56
backstory,
4:57
uh
4:58
it would be
4:59
potentially catastrophic.
5:02
The markets would not
5:04
react kindly to her policy platform. She
5:07
talks a good talk about respecting
5:09
fiscal rules, but we know what she wants
5:12
to do, which taxes she wants to
5:13
increase.
5:15
Um and there's just so little room for
5:17
maneuver in the UK economy these days
5:20
that I have to conclude the best outcome
5:23
for all of us would be for Keir Starmer
5:26
to stay in office
5:28
and to muddle through
5:31
um with the sort of,
5:32
you know, middle-to-low growth rates
5:35
that we're going to have to get used to
5:38
um and you know, [snorts]
5:40
muddle through his King's Speech agenda,
5:43
which he described laughably as radical,
5:46
which was mostly about, I don't know,
5:48
giving votes to 16-year-olds and
5:50
clamping down on ticket touts and
5:52
setting up new commissions and inquiries
5:53
left, right, and center.
5:55
Um
5:56
Starmerism, basically. Um meanwhile,
6:00
whilst the Labour Party have this debate
6:01
about their future, they will be trying
6:03
to figure out quite what they are and
6:04
who they're for. Their electoral
6:06
coalition has disintegrated, uh and
6:08
there are different factions within the
6:09
party. Those on the left who are still
6:12
talking about rent caps and wealth taxes
6:15
and more windfall taxes. Uh and those on
6:18
the more interesting side, um MPs like
6:21
Chris Curtis and others around the
6:22
Labour Grace Group who have a a more
6:24
thoughtful agenda uh that does focus on
6:27
enterprise. Um but what are you going to
6:30
get? Are you going to get a big, bold
6:32
welfare reform package? Are you finally
6:34
going to get someone coming over the
6:35
hill and saying, "We've hammered
6:37
business with too many costs. We've got
6:39
energy prices that are too high. We need
6:40
to do something dramatic." And make a
6:42
moral case to Labour MPs for that kind
6:45
of reform?
6:47
I don't see it happening. Uh so, in a
6:49
situation where we're facing
6:52
little to no growth in the UK economy
6:55
for the rest of this year, um not least
6:57
thanks to the Iran war. Uh we're now
6:59
going to add to that mix the complete
7:01
uncertainty of of possibly a month-long
7:03
Labour leadership contest um with an
7:06
uncertain outcome that will either be,
7:09
you know, Starmerish in the form of
7:12
of of Wes Streeting. Um or something
7:15
more dramatically to the left, which
7:18
brings with it, from my perspective, uh
7:21
a whole new series of nightmare
7:22
scenarios and challenges for a country
7:25
which is already beginning to feel like
7:26
we're sinking to our knees. So,
7:31
buckle up, strap in. The party that
7:33
promised to end the chaos is dragging us
7:36
all into a chaotic future.
7:39
We'll keep a very close eye on it here
7:41
at City A.M. So, if I don't see you
7:43
sooner, I'll see you this time next
7:44
week. And in the meantime, stay
7:45
up-to-date and in the know with the City
7:47
A.M. app and on cityam.com.
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