Hours before Britain’s government was rocked by resignation on Thursday, Chancellor Rachel Reeves stepped in front of the Downing Street cameras to warn that a Labour leadership battle risked “plunging the country into chaos”.
Investors saw her comments not just as a reprimand to prime ministerial aspirants such as Wes Streeting, who quit as health secretary in the course of the day, but as the UK government’s latest attempt to use the threat of a bond sell-off to stave off internal rebellion.
Such admonitions reflect a harsh reality facing all British politicians: whoever runs the government will be in thrall to a bond market that holds growing sway over debt-laden major economies. “This would be the first party leadership contest where the bond market has a vote,” said one Labour official.