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Marian Sumset Webb
Welcome to the Marion Talks Money Market Wrap where we talk about the biggest moves in markets this week and what is driving them. I'm Marian Sumset Webb, Editor at Large
John Steppe
for Bloomberg uk We and I'm John Steppe, senior reporter at Bloomberg and author of the Mayan still newsletter. I was just carried away because this is an emergency podcast.
Marian Sumset Webb
This is not an emergency podcast. This is a regular podcast just done slightly more quickly than usual. That's it.
John Steppe
Oh stop spoiling my face.
Marian Sumset Webb
All right now come on John. There's a lot going on and we are speaking on 13th May mid afternoon and normally I don't bother telling people exactly when we're speaking, but I'm telling them today because there is a lot going on. We're just sitting here. We were waiting for a resignation from Keir Starmer or a mention of a resignation or a possibility of resignation. And at the moment we are hearing that possibly he might announce a possible resignation tomorrow or something like that, or maybe next week, or maybe in a month, or maybe in two months.
John Steppe
What I've heard is that Wes Stretton is considering resigning tomorrow and then launching a leadership battle. Just to be very clear, I may be completely wrong here, I'm not a political expert, but I don't think Keir Starmer's ever going to resign as involuntarily go.
Marian Sumset Webb
I think bring, as I read somewhere this morning, he's given giving all the kids a great lessons in resilience and script and we're finally finding out what he's good at.
John Steppe
Yeah, I know, it's funny, hanging on
Marian Sumset Webb
in the face of adversity. Ghost Stor.
John Steppe
They also try to make this sort of like big thing of him being ruthless and then they're surprised when he is actually literally ruthless in terms of protecting his own position. But yes, anyway, listen, so he's not
Marian Sumset Webb
going to go by himself? Probably not.
John Steppe
They need to push him.
Marian Sumset Webb
And even if he did, political uncertainty isn't going anywhere because who knows who comes next? And if it ends up with the party being shoved further left, even further left, then the bond market isn't going to like that either. So it's hard to see how his resignation, or his forced resignation anyway, would improve matters.
John Steppe
I mean, not from the bond market's point of view. It depends on. I mean, I think that people object to this because they think, oh, gosh, it's more infighting. But at the end of the day, the country has actually given its verdict quite strongly in the local election. And if I'm honest, I don't really have a big issue with parties changing leaders in the middle of the game. If it is clear that the population is not happy with the way things are going, I think that's kind of clear. Yeah. And I don't think we need to necessarily can have a general election to give them a mandate. But yes, we've got Streeting. The candidates so far that we're aware of are straighting, possibly Angela Rayner, although she seems to be falling in behind Andy Burnham. So basically, that is it. You get Andy Barnum, who isn't an mp, but they're all trying to find some convoluted way to let him stand. And streeting and streeting is regarded as being on the right of the Labor Party to most listeners who might have a more kind of neutral political perspective. That doesn't mean he's right wing. It Just means that he's less addicted to spending than the people.
Marian Sumset Webb
He's definitely a little bit more pro market.
John Steppe
He's.
Marian Sumset Webb
Yeah, you know, he's been more pro market on public services. You know, he's been talking about using the private sector in the nhs. He's a little bit less pro relentless expansion of welfare than some other people. A little bit more hardline on crime. Maybe he's kind of bleeding tiny bit more pro business. You know, you could call him slightly right of the rest of the Labour Party.
John Steppe
Yeah, he still believes in a decent sized state, but he's not going to sit there and go, yeah, the bond market. Yeah, whatever that can go away. You know, he's somebody who actually understands roughly how things work. Andy Burnham clearly keeps sort of trying to allude to a way to get around the bond market. He's clearly aware that it matters, but it's not clear, I would say, from what he says or from what his supporters say particularly, that they really get what it's for or, you know, why it's there or why it's a constraint. And I think that's something that can make the, obviously will make the gilts market kind of, you know, worry.
Bloomberg Daybreak Hosts (Nathan Hager and Karen Moscow)
Yeah.
Marian Sumset Webb
And we have to be very clear on what's going on here already and that the UK guilt market is, you know, there's lots will talk about, oh, maybe our debt to GDP ratios aren't on that bad relative to other people's and, you know, maybe there's stability ahead, et cetera, et cetera. But you can't get away from the fact that net public debt to gdp is pushing 100% in the UK. You can't get away from the fact that Rachel Reeves has pushed up spending massively since you get in both on current spending and what we might call, or not call investment spending.
John Steppe
Yeah. There is the tax take that's also shot up, that is keeping that in check. It's not because they've been careful or anything like that.
Marian Sumset Webb
And so, you know, there is, there is a reason why UK debt is priced at a much higher level or higher yield than other debt inside the G7, 60 plus basis points above everybody else. And the reason for that is that we have horrible debt levels and absolutely no expectation in the minds of most people that anything is going to change.
John Steppe
Yeah.
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John Steppe
And also we've consistently too high inflation. Which is basically because as Simon French At Pam, New Libra keeps pointing out we basically ration every part of the economy that we need to grow without inflation.
Marian Sumset Webb
And this debt level is hideous for public spending. So at the beginning of the pandemic, we were spending well under 5% of government spending was on debt interest. And last year it was 8%. And now it's going to be significantly higher. Yeah, it's getting 10% keeps going up and up and up and you're suddenly spending. 10% of government spending is on interest payments alone. You know you're in trouble.
John Steppe
Yeah, it's not sustainable. And so, yeah, you can see why. I think the main reason the gilt market is a bit more worried about the politics than it may have been is because of this idea that they may throw what little fiscal caution they've got to the winds. And as far as I can see, the other problem is that whether or not we don't know that anyone's going to stand and challenge Starmer, but if streathing does it, there's already talk from the left of the party that, well, if he gets into power, one of them said we'll kick him out faster than they get rid of Liz Truss. And you're like, okay, so it's not even as if the next leader is necessarily the final leader for this particular parliament. I get why gilt markets are at the moment unsettled rather than panicking and we don't. I think it's really important to emphasize that this is not like 2022 in the Liz Truss situation because that was a very different set circumstances and you don't have the same level instability and leverage that creates a kind of doom loop. But in some ways that's worse because actually what we're getting now is just a repricing that says, well, okay, well, Britain is really kind of unreliable. We're a bit worried about. It's not so much even. It's not its capacity to reprice this, it's the desire. There are ways, and I'm certainly not the first person to say this, but there are ways that this does echo the Jim Callahan labor government of the 1970s, which is a group of people refusing to confront reality with that. It was the IMF that created the external shock that gave Jim Callaghan the permission to stand up in front of his party and say, look, need to get a grip. We can't spend money the way we've been spending it and obviously still get kicked out of the next election. And perhaps we need something similar, some kind of bond market I guess gilt market strike or an fx. I don't like using the word crisis, but the pound falling a lot to make people wake up and realize, actually no, we need a change of direction and that's regardless of who they put in at the top.
Marian Sumset Webb
It is. You hear this more and more, John. People saying, well, the UK needs an existential crisis to help it pull itself together. It's not going to just happen. Something horrible has to happen before this ridiculous squabbling stops and things change.
John Steppe
Which is unfortunate, but yeah, I mean, I mean that's it. Crises create the opportunity to change things and I guess they always do. It's very rarely see proper change happen in the absence of a crisis. Certainly in our history and also the history of Europe more widely. Maybe that's the buy signal whenever everything goes horribly pear shaped. I don't know.
Marian Sumset Webb
Wait for the crisis.
John Steppe
Wait for the crisis.
Marian Sumset Webb
The crisis will be the catalyst. Yeah, okay. And it's not that far away, one would guess at this rate.
John Steppe
Well, you gotta hope so. It would be nice to get it over and done maybe before we have yet another party in power.
Marian Sumset Webb
An entire podcast based on the idea that the best possible outcome is a full crisis.
John Steppe
Yes, I suppose so. It's hard to really, I'd say think an alternative outcome. The alternative outcome is just kind of lumbering along the way that we've been going.
Marian Sumset Webb
That can't go on and definitely you can't go on with this, you know, anti growth stuff. And definitely at some point something has to change and at some point the UK has to be let loose to grow again. And all the wonderful things that we often talk about about the uk, you know, this great base that we have, our amazing technology sector, astonishing ability to innovate, our great education sector. The fact, as we've talked about a couple of times, the very high levels of savings that the UK population has, et cetera, we are ready to go. If only we could have a politician who could put in place the policies to allow the UK to succeed. Let's not talk ourselves around in circles and get upset. We're just going to have to leave it there before we upset ourselves. Right now the best we can hope for is the kind of crisis that lets us restart everything.
John Steppe
Yeah. Control, alt, delete.
Marian Sumset Webb
Yeah. And right now, the next few weeks, we don't see any particularly good outcomes and nor do we see any particularly good candidates.
John Steppe
No.
Marian Sumset Webb
But we have all learnt about how amazingly resilient Keir Starmer is and that's something. That is something. Thanks for listening to this week's marantalks Money Debrief. If you like our show Rape Review and subscribe wherever you listen to podcasts. Also be sure to follow me and John on X or Twitter erinsw on JohnStepek. This episode was produced by Samosadi. Production support and sound design by Moses andam. Questions and comments on this show and all our shows are always welcome. Our show email is meranmoneyloomberg.
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Host: Merryn Somerset Webb (Editor-at-Large, Bloomberg)
Guest: John Stepek (Senior Reporter, Bloomberg UK, author of “Money Distilled” newsletter)
Date: May 13, 2026
This episode, recorded amid ongoing political upheaval in the UK, features Merryn Somerset Webb and John Stepek discussing why the current turmoil—marked by potential Labour leadership challenges and dire public finances—could be heading toward a full-blown crisis. The conversation takes a candid, sometimes darkly comic tone as they unpack the risks for markets and for Britain’s economic trajectory.
Summary for First-Time Listeners:
If you haven’t tuned in, this episode gives a brisk, insight-packed rundown on why Britain’s current political infighting and unsustainable finances may well be setting the stage for a bond market or currency crisis—and why, paradoxically, many in finance now see such a shock as the best hope for a reset. Both knowledgeable and darkly witty, this is an essential listen for anyone keen to understand the state of UK markets and politics in mid-2026.