Political risks in the UK could damage British government bonds ahead of local elections.

Economists at Pantheon Macroeconomics said in a report that as local elections approach in May, the UK faces increasing political risks that could harm its bond market. These economists said that Prime Minister Keir Starmer is very unpopular among voters, and there is a risk of leadership change, which could lead to relaxation of fiscal policy. They said possible competitors may be inclined to increase public spending, causing the risk premium on UK government bonds to rise. "Leadership struggles could impact UK government bonds." UK government bond yields rose, with media reports suggesting that MP Andrew Gwynne plans to retire, potentially providing a pathway for Manchester Mayor Andy Burnham to enter Parliament and challenge Starmer. Data from Tradeweb shows that the yield on 10-year UK government bonds rose by 4 basis points to 4.486%.