The Green Party unexpectedly captured the Labour Party's stronghold! The Starmour left-wing defense line collapsed with warnings of pound and gilt alarms sounding simultaneously.

The Green Party won a seat in a by-election in Manchester, highlighting the threat it poses to the ruling Labour Party led by Prime Minister Keir Starmer on the left wing. This by-election defeat is a major blow to Prime Minister Keir Starmer's leadership of the Labour Party, which had won a significant seat with a large majority 19 months ago. This result also suggests that the UK ruling party may suffer significant losses in the local elections in May, where it must compete fiercely with various political forces including the Green Party and the Reform Party led by Nigel Farage. With Starmer losing support on the left, the fragmentation of the UK political landscape deepens, and UK domestic assets face higher political risk premiums. Green Party candidate Hannah Spencer, a local plumber, received an impressive 40.7% of the vote in Gorton and Denton. The constituency became vacant last month due to the departure of Andrew Gwynne, who had won the seat with a large majority for the Labour Party in 2024. This strong vote share was enough to defeat Reform UK's Matt Goodwin and Labour's city councilor Angeliki Stogia, who received 28.7% and 25.4% of the vote respectively. Labour Party chair Anna Turley described the result as "disappointing." She said, "We will continue to pursue government plans to address the cost of living crisis facing families, create opportunities for young people, and invest in public services. The anger politics and simplistic answers advocated by the Green Party and the Reform Party cannot achieve these goals." Spencer's victory marks the Green Party's first win in a by-election and the party's first seat in northern England. Her win, surpassing the expectations of many political commentators, took 26% of the vote from the Labour Party - the Green Party currently has five MPs in parliament, second only to the Reform Party's eight MPs. The UK Green Party is a progressive/left-wing challenger to the Labour Party, advocating wealth tax, higher capital gains tax/high-income national insurance, and the nationalization of water, railways, and major energy companies in its manifesto, which is significantly closer to the left-green-redistribution route. The Green Party's victory in this by-election means that the party, led by Starmer, is now in fierce competition with the Green Party and Nigel Farage's right-wing Reform Party. The UK Green Party has clearly positioned itself as a more left-wing progressive political choice than the Labour Party in terms of policy positions, voter base, and electoral performance. Especially in areas such as economic equality, climate justice, and social reform, the Green Party's proposals are more radical and progressive than the current Labour government's. Spencer said in an interview, "It is clear that people are ready for change. We reject the parties that have long excluded us and those funded by billionaires with vested interests. Clearly, the people here today have decided to vote for someone like me, a very ordinary person." While British voters often use by-elections to express dissatisfaction with the current government, this by-election defeat is undoubtedly a major blow to the Starmer government, as his party won this particular seat 19 months ago with a 37-point lead. Moreover, for the first time in over 90 years, the key Gordon area of the constituency is no longer firmly represented by the Labour Party. This also suggests that the UK ruling party may face significant losses in the local elections in May. Labour will have to face strong challenges from the left with the Green Party, Plaid Cymru, and the Scottish National Party, while also contending with the right with Nigel Farage's populist right-wing Reform Party. Now, the current UK Prime Minister may face internal criticism for preventing popular Manchester mayor Andy Burnham from standing as a Labour candidate in Gorton and Denton. Some Labour MPs saw this vote on Thursday as a dangerous moment for the Prime Minister, as there had been murmurs of dissatisfaction within the party about his leadership. By Friday, the situation will become clearer: potential contenders - including Health Minister Wes Streeting and former Deputy Prime Minister Angela Rayner - will either be preparing to challenge directly or at least hold off until after the May local elections. In last year's local elections, Labour almost lost two out of every three seats it defended; and its poor performance in national polls - especially trailing significantly behind the Reform Party - suggests that Starmer's leadership of the Labour Party is likely to perform poorly again this year. These elections cover local councils throughout England, as well as national parliaments in Scotland and Wales. A poor result could trigger a leadership challenge. "Looking forward to the elections on May 7," Farage said in an interview. "This will be Starmer's and the Conservative Party's farewell." In this by-election on Thursday, the main opposition party, the Conservative Party candidate Charlotte Cadden, received 1.9% of the vote, while the third largest party in parliament, the Liberal Democrats' Jackie Pearcey, received 1.8% of the vote. For Green Party leader Zack Polanski, Spencer's victory demonstrates the correctness of his strategy - confronting the populist right on their own territory. Since taking over as party leader in September, the Green Party has risen in the polls; even before that, the party had doubled its number of seats in last year's local elections. However, this result is a major blow to the far-right populist Reform UK, especially because the party was leading in polls by Find Out Now and Electoral Calculus just before the vote. The party had tried to portray the vote as a direct duel between its candidate and the Green Party. The candidacy of 44-year-old Goodwin, a figure who transitioned from academia to television commentator, in a predominantly Muslim area was controversial in itself; he had previously stated that "millions of British Muslims" hold views that are "fundamentally contrary to British values." Nevertheless, the Reform UK party seems to be preparing for significant progress in the upcoming local elections. Since April last year, Nigel Farage's Reform UK has consistently led national polls; it also won the only other by-election in this parliamentary term when Sarah Pochin narrowly won in another traditional Labour stronghold, Runcorn and Helsby, in May by 6 votes. In last year's local elections, the Reform Party won over 670 new seats, controlled 10 local councils, and secured two mayoral positions. Rob Ford, a political science professor at the University of Manchester, said the Labour Party is caught in a dilemma as it tries to attract traditional conservative voters by leaning to the right. "They may be entering an electoral death spiral, with fewer and fewer people satisfied with them," he emphasized. For the UK stock, bond, and currency markets, the direct impact of this by-election is limited, but the political signals should not be ignored. Directly, a by-election will not immediately change government ownership, as Labour still holds a large majority in the lower house with 404 seats according to the latest AP count; therefore, it is not an event that would immediately reprice the "UK political power transition." However, at an indirect level, it is crucial: this defeat shows that the Labour Party is simultaneously being squeezed by the left-wing progressives of the Green Party and the populist right of the Reform UK party, accelerating the fragmentation of the political landscape. British media had already noted before the vote that the market was seeing this Manchester by-election as an early test of Starmer's popularity and policy stability, with the pound falling by 0.13% against the dollar and 0.1% against the euro on that day, while the market traded political uncertainty and a return to interest rate cuts by the Bank of England. However, the Green Party winning the seat itself is not enough to trigger a "dramatic repricing" of UK assets, but it increases the likelihood of continued political risk premiums in the UK market in the coming months. If this by-election is just an isolated event, the market impact will quickly dissipate, but if doubts about Starmer's leadership escalate within the party, the ripple effects on the British market will become clearer: the pound will be under pressure, British government bond assets (gilts) will be more heavily pressured to compensate for higher political risk premiums, and UK domestic demand-oriented assets will be more sensitive than continental European assets.