Starmergeddon

Why Keir Starmer probably won't complete his term.

Commercial Summary: Sir Keir Starmer’s government is on its last legs and will likely collapse by summer if not sooner. This risks political turmoil similar to that seen under the Conservatives, at a time when markets are far more volatile. Meanwhile, the risk of mass destabilising unrest is rising.

Prime Minister Sir Keir Starmer may have to resign soon due to a breaking scandal. On Christmas Even 2020, he may have broken the COVID19 rules by meeting with his voice coach, a former actress, during the strictest lockdown.

Melancholy Keir, by Grok.

Starmer claims she was a key worker, but

• the meeting happened before she started working for the Labour Party;

• it is unclear why he would have had to meet her in person, and on Christmas Eve, no less, when she was working from home with other clients;

• there is no reasonable cause to call a voice coach a key worker; and, last,

• Starmer did not have the authority to designate her a key worker.

The British loathe their politicians, but they seem to loathe their Prime Minister the most.

Conservative former Prime minister Boris Johnson was forced to resign because he broke lockdown rules, as far as the media was concerned. In reality, his party turned on him and used that as a pretext. A similar dynamic is developing with Sir Keir.

Our view is that Labour Party insiders leaked this story - which may turn out to be much bigger than meeting a voice coach - in a bid to unseat Starmer, who is clearly a liability in terms of security and politics. Already, Health Secretary Wes Steering is setting out his own path for confronting Reform, the largest threat to Labour, presenting himself as an alternative to Starmer.

We think regardless of that particular scandal, Starmer is struggling to retain the support of the party due to his unpopularity and inexplicable decisions. Labour feels as though it has been in power for years, and is completely out of ideas. In a way, it has been in power for years: this is still the Tony Blair era. Blair’s agenda has been fully implemented, and we are seeing its results.

UK Election Results

Meanwhile, the risk of unrest in Britain is rising due to the relationship between the British and the Muslim community, failing government services, illegal immigration, rising poverty levels, higher energy prices, and falling living standards. The US is working on unseating Starmer, and X will be used very effectively to undermine him at every turn. We discuss the risk of rioting in Europe below.

Europe's Coming Catastrophic Riots

The underlying issue, which is more suited to a discussion in the pub than to this newsletter, is that the British state has lost its legitimacy. It is not acting to serve the British public. Rather, it serves a narrow set of extremely ideological special interests, minorities who are inherently hostile to British culture, and some civil servants and public sector workers. This, in our view, is what is driving unrest and political risks.

Commercial Implications:

• We expect Starmer to have had to step down before summer 2025, if not sooner.

• The markets clearly dislike Starmer’s tax-and-spend Chancellor Rachel Reeves and the extremist policies of Net Zero tzar Ed Miliband. Businesses are reportedly planning to cut jobs and there is a record jump in severely distressed firms. Further taxes - and increases in energy costs - would be catastrophic. Reflecting this, British bond yields are at the highest levels since 2008. A perfect storm is brewing for the British economy.

• December 2024 borrowing was twice as high as December 2023 borrowing, due to rising spending that outstripped receipts. If this situation continues without a shift in ideology and policy, the government may be stuck raising taxes during an economic downturn, accelerating a financial crisis.

• The Labour Party’s main voter base is now state workers and those dependent on state funding and welfare. However, Britain’s only sustainable fiscal pathway is to cut spending dramatically. Our view is that up to two thirds of the Civil Service and the overwhelming majority of charities and quangos need to face the axe.

• A Labour politician would at most introduce some very mild cuts, which would anger his voter base, fail to satisfy the public, and lead to greater turmoil within the party. This would fail to calm down markets or lower borrowing costs.

• Labour are on the same pathway that led to the Conservatives imploding due to infighting. If Britain once again finds itself playing musical chairs with prime ministers, a market crash and a run on the pound would be quite likely.

• If Labour and the Conservatives both implode, there are three scenarios after a fresh election:

  • a Lib-Dem, Green, SNP, Labour coalition, which would be so far left it would crash the financial markets within weeks; or

  • Nigel Farage’s Reform would win, but that party has no programme and no plan. It wants to emulate Trump but has not put in the proper planning and policy work to do so.

  • This would lead to chaotic policymaking for at least a few months and perhaps longer, with the Civil Service and the judiciary trying to obstruct at every turn, while Reform attempts to dismantle the quangos, the FCDO, and Net Zero, to purge the civil service, police, and judiciary of Net Zero and DEI ideologues, and to dramatically reduce spending.

  • A similar but less extreme version of the above would occur if the Conservatives replace Ms Badenoch, and pivot to the right of Reform on immigration, spending cuts, DEI, and the like. The Conservatives have far more government experience, but are deeply divided over whether to tilt towards the Liberal Democrats or Reform, as their MPs are far to the left of the general electorate.

• Given the above, we view civil unrest risks in Britain as very high, and are of the view that mass unrest, followed by major policy reversals due to early elections, is likely in the next two months to, at most, two years.

• For a discussion in the pub, or to become a paying client, do please reach out by replying to this email.