Gilts and the pound could be plunged into crisis territory should Wes Streeting resign from the UK cabinet tomorrow to mount a leadership challenge against the Prime Minister, warns the CEO of one of the world’s largest independent financial advisory and asset management organisations.
The stark warning from Nigel Green of deVere Group comes as speculation intensifies that Streeting could quit as Health Secretary and trigger a contest against Keir Starmer, opening the door to a prolonged struggle for power inside government at the precise moment markets are already punishing Britain.
He says: “Should Wes Streeting resign tomorrow and launch a leadership challenge, gilts and sterling could move rapidly into crisis territory.
“The markets hate uncertainty, but they hate a political vacuum even more.
“A cabinet resignation followed by a leadership fight would signal that the government is losing control of itself while investors are already questioning the country’s fiscal direction.”
UK assets are already flashing warning signs. The benchmark 10-year gilt yield climbed to 5.13% this week, the highest since 2008, while 30-year gilt yields pushed above 5.8%, levels last seen in 1998. Sterling has slipped toward $1.35 against the dollar as traders trim exposure to UK risk.
Higher gilt yields mean higher borrowing costs for the government, greater pressure on mortgage pricing, and a more expensive funding environment across the economy.
The deVere CEO continues: “If gilts sell off harder, the cost crashes through the economy system. The Treasury pays more, households feel it, businesses delay decisions, and confidence weakens.
“A Streeting resignation would be interpreted as the start of something bigger. Markets would immediately ask who is next, how many ministers move, and whether the administration can survive in its current form.”
He warns that once one senior figure moves, others could follow, with former Deputy PM Angela Rayner likely to become central to the next phase of internal power dynamics.
“If Streeting jumps, the pressure multiplies. Others then have to choose sides. Angela Rayner’s position becomes critical, and investors would start pricing the possibility of a government pulled further left on tax, spending and labour policy.
“That is where the real anxiety begins. Markets can cope with ideology of any stripe if it is disciplined and coherent. They recoil from programmes that imply materially higher borrowing without a credible growth engine.”
Investors still remember the 2022 gilt turmoil, when a loss of confidence in fiscal credibility triggered a violent bond selloff and forced emergency intervention by the Bank of England. Nigel Green says the current backdrop is different, but memories remain powerful.
“The UK does not need a repeat of 2022 to suffer damage. It only needs investors to suspect that discipline is weakening again. Once that suspicion takes hold, the risk premium rises quickly.
“This week’s gilt moves show that confidence is already fragile. Add a leadership war, and the reaction could be severe.”
He notes that Britain is also contending with sticky inflation risks, elevated global bond yields and geopolitical energy pressures, leaving little room for domestic political mistakes.
“The timing could hardly be worse. Global borrowing costs are high, inflation concerns have not vanished, and capital is highly selective. In that environment, countries that look unstable are punished first.”
Nigel Green says markets will watch three immediate indicators if Streeting resigns: the 10-year gilt yield, long-end gilt liquidity, and sterling against the dollar.
“If the 10-year yield breaks decisively above recent highs, if long-dated gilts come under heavy pressure again, and if sterling drops sharply through support levels, that would be the market delivering a blunt verdict.”
He adds that clarity could still prevent escalation.
“The remedy is political authority and fiscal credibility. Investors need to know who is in charge, what the economic framework is, and whether it will hold.”
“If tomorrow brings resignations, rebellion and competing promises, the UK risks turning a political drama into a major market event. It would likely be costly, avoidable, and immediate.”
