A deepening internal crisis within Labour is weakening Prime Minister Keir Starmer's authority and raising the likelihood of a leadership challenge, but structural constraints and broad party consensus make sharp policy shifts or a break with the United Kingdom's current fiscal trajectory unlikely, limiting the risk to only limited, short-term market volatility. Starmer's leadership came under acute pressure after renewed controversy over his appointment of Peter Mandelson as ambassador to the United States triggered senior resignations in Downing Street and open calls for him to step aside. Chief of staff Morgan McSweeney resigned on Feb. 8, taking responsibility for advising Starmer on the appointment despite Mandelson's past association with convicted sex offender Jeffrey Epstein. Tim Allan, Starmer's director of communications, followed suit shortly thereafter. Officials cited by British media said cabinet ministers were also preparing to privately urge Starmer to resign or threaten their own departures. On Feb. 9, Scottish...
