Berliner Boersenzeitung - UK politics: Outlook for 2026

EUR -
AED 4.183233
AFN 72.900104
ALL 91.877324
AMD 414.797627
ANG 2.039349
AOA 1045.665133
ARS 1736.795085
AUD 1.614556
AWG 2.050324
AZN 1.929371
BAM 1.955317
BBD 2.295034
BDT 140.215395
BGN 1.917555
BHD 0.429594
BIF 3432.052962
BMD 1.139069
BND 1.455841
BOB 13.964554
BRL 5.909604
BSD 1.139419
BTN 109.11607
BWP 15.516171
BYN 3.44275
BYR 22325.749957
BZD 2.291734
CAD 1.610017
CDF 2665.421243
CHF 0.943457
CLF 0.027745
CLP 1095.522593
CNY 7.646854
CNH 7.670829
COP 3814.158657
CRC 518.072139
CUC 1.139069
CUP 27.347251
CVE 110.237793
CZK 24.358299
DJF 202.909921
DKK 7.475483
DOP 67.763276
DZD 152.818284
EGP 58.990341
ERN 17.086033
ETB 184.850379
FJD 2.559773
FKP 0.85991
GBP 0.859642
GEL 2.978697
GGP 0.85991
GHS 13.234734
GIP 0.85991
GMD 83.7416
GNF 10021.526666
GTQ 8.701852
GYD 238.41116
HKD 8.933144
HNL 30.583452
HRK 7.533577
HTG 149.123196
HUF 365.202592
IDR 20405.39374
ILS 3.47195
IMP 0.85991
INR 109.142732
IQD 1492.731591
IRR 1565735.599723
ISK 136.984345
JEP 0.85991
JMD 180.275508
JOD 0.807618
JPY 179.112846
KES 147.673554
KGS 99.609521
KHR 4633.856354
KMF 493.217167
KPW 1025.16235
KRW 1542.572887
KWD 0.351562
KYD 0.949566
KZT 504.785418
LAK 25558.69206
LBP 102039.416452
LKR 376.227146
LRD 195.991629
LSL 18.590812
LTL 3.363374
LVL 0.689011
LYD 7.285202
MAD 10.934601
MDL 20.226008
MGA 5030.758398
MKD 61.559807
MMK 2391.318071
MNT 4096.27867
MOP 9.206128
MRU 45.840686
MUR 54.140099
MVR 17.598252
MWK 1975.812365
MXN 20.229913
MYR 4.640683
MZN 72.797622
NAD 18.590812
NGN 1510.838223
NIO 41.929652
NOK 10.830096
NPR 174.585912
NZD 1.992947
OMR 0.439192
PAB 1.139419
PEN 3.868245
PGK 5.076747
PHP 71.01757
PKR 315.746773
PLN 4.371461
PYG 6716.342392
QAR 4.153475
RON 5.27298
RSD 117.42102
RUB 96.076288
RWF 1684.084364
SAR 4.278244
SBD 9.113134
SCR 15.790891
SDG 685.148141
SEK 11.297001
SGD 1.456185
SHP 0.859999
SLE 28.078724
SLL 23885.695533
SOS 651.239273
SRD 42.905879
STD 23576.425949
STN 24.493955
SVC 9.970539
SYP 14810.173807
SZL 18.586413
THB 38.016405
TJS 10.511606
TMT 3.998132
TND 3.373267
TOP 2.742604
TRY 55.748878
TTD 7.750087
TWD 36.141174
TZS 3024.153632
UAH 51.024307
UGX 4462.898547
USD 1.139069
UYU 45.648734
UZS 13485.671707
VES 970.978133
VND 29588.453106
VUV 134.852368
WST 3.127568
XAF 655.957
XAG 0.017716
XAU 0.000265798508
XCD 3.07839
XCG 2.053593
XDR 0.805381
XOF 655.957
XPF 119.331742
YER 269.560677
ZAR 18.44165
ZMK 10252.989304
ZMW 22.227514
ZWL 366.779713
SSP 6507.035634
MXV 2.292486
  • BCC

    1.0400

    77.14

    +1.35%

  • BCE

    -0.3300

    20.97

    -1.57%

  • RBGPF

    -0.5900

    65.4

    -0.9%

  • RYCEF

    -0.3600

    19.31

    -1.86%

  • RIO

    0.0900

    94.56

    +0.1%

  • GSK

    -0.4100

    49.24

    -0.83%

  • CMSC

    -0.1100

    20.4

    -0.54%

  • VOD

    0.1300

    16.62

    +0.78%

  • NGG

    0.2600

    75.49

    +0.34%

  • RELX

    0.0100

    33.52

    +0.03%

  • CMSD

    -0.0700

    20.3

    -0.34%

  • BTI

    -0.3900

    55.63

    -0.7%

  • JRI

    -0.1500

    11.02

    -1.36%

  • AZN

    2.0200

    166.58

    +1.21%

  • BP

    -0.2600

    44.15

    -0.59%


UK politics: Outlook for 2026




Barely six months after the landslide general election of late 2024, the new Labour government entered 2025 with high expectations and a hefty parliamentary majority. That optimism quickly gave way to impatience as voters confronted a cost‑of‑living crisis, strained public services and a sense that promises of “change” had yet to translate into tangible improvements. Opinion polls showed unprecedented volatility, with Reform UK and the Greens capitalising on frustration to peel supporters away from both major parties. By late summer the combined backing for “insurgent” parties outstripped that of Labour and the Conservatives, signalling a shift toward multi‑party politics and a deadlock between loosely defined left‑ and right‑leaning blocs.

Domestic politics were rarely short of drama. In January, Economic Secretary to the Treasury Tulip Siddiq resigned following controversy over her financial ties to relatives abroad, and Home Secretary Yvette Cooper announced a nationwide review into grooming gangs. February saw Health Minister Andrew Gwynne dismissed for sending abusive messages, and the government cut international aid to boost defence spending to 2.5 % of GDP by 2027, prompting the resignation of International Development Minister Anneliese Dodds. In March, Reform UK MP Rupert Lowe was suspended after publicly attacking Nigel Farage’s leadership, exposing fissures within the rising populist movement.

April brought a reminder of the state’s willingness to intervene in industry. Parliament was recalled over Easter to fast‑track the Steel Industry (Special Measures) Act, enabling ministers to take control of the Scunthorpe steelworks. The emergency law prevented the closure of Britain’s last blast furnaces, safeguarded thousands of jobs and gave the government powers to direct the board and workforce while a rescue plan was put in place. The episode underscored a new willingness to wield state power to protect “nationally critical” capabilities.

Local elections in May deepened the sense of volatility. Reform UK captured 677 of roughly 1,600 contested council seats, while the Liberal Democrats gained 160 seats and seized control of several county councils. Labour’s majority proved brittle as dozens of backbench MPs publicly opposed proposed cuts to disability benefits. In June the government was forced into a climb‑down over winter fuel payments and faced the emergence of two break‑away movements from Reform UK: Advance UK, led by Ben Habib, and Restore Britain, led by Rupert Lowe.

July delivered a landmark for foreign and domestic policy alike. Prime Minister Keir Starmer hosted German Chancellor Friedrich Merz in London to sign the so‑called Kensington Treaty—an ambitious friendship pact that included plans for a direct high‑speed rail link between London and Berlin and deeper cooperation on energy, security and climate action. The agreement set up a joint taskforce to overcome regulatory barriers and signalled an aspiration to strengthen European connectivity and decarbonise long‑distance travel. The month also saw Conservative leader Kemi Badenoch reshuffle her shadow cabinet, and former Labour leader Jeremy Corbyn teamed up with backbencher Zarah Sultana to launch a new left‑wing party, provisionally titled Your Party.

Political scandals returned in late summer. Housing and homelessness minister Rushanara Ali resigned in August after criticism over a rent hike at a property she owned. In September, Deputy Prime Minister and Labour deputy leader Angela Rayner stepped down after admitting she had underpaid stamp duty on her Hove flat. Her departure forced a sweeping reshuffle: David Lammy became Deputy Prime Minister, Yvette Cooper moved to the Foreign Office and Shabana Mahmood took over as Home Secretary. United States President Donald Trump’s second state visit that month added to the diplomatic circus. 

October’s Caerphilly by‑election delivered a shock when Plaid Cymru overturned a Labour seat for the first time since the Senedd was established in 1999. At Labour’s conference in Liverpool, grassroots dissatisfaction manifested when Lucy Powell defeated Education Secretary Bridget Phillipson to become deputy party leader, signalling demands for a more left‑wing agenda. 

The year’s final months offered no respite. Home Secretary Shabana Mahmood announced that elected police and crime commissioners would be abolished from 2028, while First Minister John Swinney said the Scottish government would issue its first bonds in 2026‑27. In late November, Chancellor Rachel Reeves presented the Autumn Budget, which scrapped the two‑child benefit limit and raised the National Living Wage, but funded some measures through “stealth taxes” such as freezing income tax thresholds. Embarrassment followed when the Office for Budget Responsibility mistakenly published its economic and fiscal outlook online 40 minutes before Reeves delivered her statement, causing market turbulence. The leak triggered an investigation and the resignation of OBR chair Richard Hughes in December. By year’s end, Labour’s poll ratings had plummeted. Reform UK led national surveys, while the Greens approached parity with the Conservatives. Speculation mounted about potential leadership challenges and the likelihood that the May 2026 local and devolved elections could determine the fate of Starmer’s premiership.

Foreign policy and the enduring war in Ukraine
Despite domestic turmoil, the UK sought to reclaim a leadership role abroad. The most significant act was the signing of a century‑long partnership with Ukraine. During his first trip to Kyiv as prime minister in January, Starmer promised that Britain would support Ukraine “beyond this terrible war” and into a future where it was free and thriving. The One Hundred Year Partnership commits the UK to providing at least £3 billion in military assistance annually until 2030/31—and for as long as needed thereafter. It also pledges cooperation on defence production, training, air and missile defence, intelligence sharing and joint innovation. The pact is broad, covering economic recovery, scientific collaboration and cultural ties, and was accompanied by commitments to supply mobile air‑defence systems and 150 artillery barrels. 

The agreement was signed against a backdrop of shifting geopolitics. With the United States under the new Trump administration reluctant to approve additional Ukraine funding and publicly advocating for a negotiated settlement, European nations assumed greater responsibility for security on the continent. The UK and Germany took over leadership of the Ukraine Defence Contact Group, which coordinates military assistance, while London and Paris pushed for a “coalition of the willing” to guarantee any future peace deal. European governments simultaneously expanded sanctions against Russia, agreed to increase defence spending and launched new funding mechanisms to procure equipment directly from industry. Bilateral donations of weapons gave way to initiatives aimed at joint production and financing Ukraine’s defence industry, with the UK and other allies emphasising rapid innovation and resilience.

This alignment with Kyiv reflected the government’s belief that Russia’s invasion threatened European security and the international rules‑based order. Starmer’s visit to Kyiv underscored the immediacy of the threat: during a press conference with President Volodymyr Zelenskyy at the Mariinskyi Palace, a Russian drone buzzed overhead, prompting anti‑aircraft fire. The incident reinforced London’s argument that Ukraine’s defence is inseparable from Europe’s security and that the UK must play a long‑term role in ensuring Ukrainian sovereignty.

Looking ahead to 2026: challenges and choices
The coming year promises to be pivotal. On the domestic front, the May 2026 local and devolved elections will be a referendum on Labour’s first 18 months in office. Polling experts expect Labour to suffer heavy losses across English councils, the Welsh Senedd and the Scottish Parliament. With Reform UK leading national polls and the Greens surging under new leader Zak Polanski, Labour faces pressure from both left and right. The Conservatives, led by Kemi Badenoch, hope to rebuild after their 2024 drubbing, while new parties such as Advance UK, Restore Britain and Your Party could fragment the vote further. A poor showing in May could trigger a leadership challenge against Starmer and Chancellor Rachel Reeves or prompt calls for an early general election. 

Economic headwinds remain severe. Fiscal space is limited, and the government is locked into pledges to keep borrowing within strict limits while funding rising welfare costs, investing in healthcare and increasing defence spending. The NHS will continue to test the government’s ability to deliver: ministers have promised a ten‑year plan centred on prevention, technological innovation and neighbourhood‑based care, yet reforms take time to translate into improved outcomes, and staffing shortages persist. Housing, transport and net‑zero commitments also demand urgent attention, especially as opposition parties champion radically different energy policies.

Internationally, Ukraine will remain at the centre of British foreign policy. The 100‑year partnership binds the UK to provide at least £3 billion annually in military aid and to deepen industrial cooperation with Ukraine. With Washington signalling reduced support and Russia showing no sign of halting its aggression, European nations must fill the vacuum. Britain’s leadership of the Ukraine Defence Contact Group and its role in brokering peace‑keeping guarantees will require sustained diplomatic and financial investment. Maintaining domestic consensus for such assistance in the face of economic hardship will be challenging, yet failure to support Ukraine could embolden an increasingly authoritarian Russia and undermine Europe’s security architecture.

2025 revealed both the fragility and resilience of Britain’s political system. Voters demonstrated that they are willing to abandon traditional allegiances, while ministers discovered that big majorities offer little protection when expectations run high and delivery is difficult. The year ahead will test whether the government can stabilise public services, manage economic constraints, and articulate a compelling vision that counters the insurgent appeal of Reform UK and the Greens. Above all, it will test Britain’s capacity to balance domestic discontent with its moral and strategic commitment to supporting Ukraine’s struggle against Russian aggression.