PLN: Zloty Consolidates Yesterday's Gains

Prime Minister Sir Keir Starmer remains in a vulnerable position after two weeks of political upheaval that has seen a senior minister, senior aide, and ambassador forced from their positions at the same time as the largest right-wing march in decades, and amid preparations for US President Donald Trump's high-profile state visit on 17-18 Sep. Nevertheless, as Bloomberg noted earlier today, Starmer's position is likely safe for now, given the lack of viable potential replacements as leader of the centre-left Labour Party in the short term. 

• With former DPM Angela Rayner politically wounded, Health Secretary Wes Streeting (seen as a centrist compared to Rayner on the soft left) now becomes an early favourite. However, Labour's majority in his Ilford North constituency is very narrow, and he is not as popular with party members as Rayner.
• Political betting markets continue to show bettors inclined to think that Starmer will be forced from office/resign in 2026. Data from Smarkets shows bettors assigning a 35.2% chance Starmer leaves Downing St. in 2026, up from 18.8% on 27 Aug. The implied probability that Starmer lasts until the (likely) next general election in 2029 or beyond has fallen from 33.6% on 1 Sep to 16.1% presently.
• The policy implications of the situation are mixed. On the one hand, Starmer remaining in office could be seen to lessen the risk of a major shift to the left under a new party leader and PM. On the other hand, with poor opinion polling and increasingly vocal opposition from within his party, Starmer could launch more aggressive shifts in policy (notably with the budget approaching) to try and wrest back the initiative. 

Chart 1. Betting Market Implied Probability of Year Sir Keir Starmer Leaves Office as PM, %

Source: Smarkets

• MNI: GERMANY ZEW SEP ECONOMIC EXPECTATIONS 37.3
• GERMANY ZEW SEP CURRENT CONDITIONS -76.4