Berliner Boersenzeitung - UK politics: Outlook for 2026

EUR -
AED 4.231915
AFN 75.478945
ALL 92.969244
AMD 422.084219
ANG 2.062382
AOA 1056.683283
ARS 1719.831529
AUD 1.63381
AWG 2.074187
AZN 1.986632
BAM 1.954775
BBD 2.321983
BDT 141.97557
BGN 1.956081
BHD 0.434774
BIF 3446.608087
BMD 1.152326
BND 1.475133
BOB 13.597871
BRL 5.988406
BSD 1.152896
BTN 109.845844
BWP 15.519796
BYN 3.44324
BYR 22585.587613
BZD 2.318684
CAD 1.607201
CDF 2621.541304
CHF 0.937809
CLF 0.026771
CLP 1053.629371
CNY 7.771113
CNH 7.77267
COP 3628.178755
CRC 523.727711
CUC 1.152326
CUP 30.536636
CVE 110.204835
CZK 24.234623
DJF 205.302371
DKK 7.476003
DOP 67.315003
DZD 153.136343
EGP 57.869301
ERN 17.284888
ETB 186.485445
FJD 2.552287
FKP 0.852777
GBP 0.854277
GEL 3.007639
GGP 0.852777
GHS 13.200023
GIP 0.852777
GMD 85.272087
GNF 10127.734528
GTQ 8.796503
GYD 241.242483
HKD 9.042129
HNL 30.901934
HRK 7.535405
HTG 150.804213
HUF 364.354501
IDR 20603.587067
ILS 3.432893
IMP 0.852777
INR 109.944508
IQD 1510.301678
IRR 1584015.988505
ISK 141.977919
JEP 0.852777
JMD 182.513526
JOD 0.816962
JPY 183.707216
KES 148.949888
KGS 100.770608
KHR 4668.653768
KMF 493.196009
KPW 1037.093456
KRW 1631.19218
KWD 0.356288
KYD 0.960792
KZT 536.806253
LAK 26012.250333
LBP 103242.019778
LKR 385.376296
LRD 209.249394
LSL 18.628577
LTL 3.402519
LVL 0.69703
LYD 7.353145
MAD 10.70864
MDL 19.985783
MGA 4961.377494
MKD 61.492763
MMK 2419.811575
MNT 4144.530656
MOP 9.318474
MRU 46.081042
MUR 54.539713
MVR 17.814729
MWK 1999.143284
MXN 19.657954
MYR 4.711283
MZN 73.631224
NAD 18.628253
NGN 1570.239571
NIO 42.427941
NOK 10.948652
NPR 175.751626
NZD 1.973208
OMR 0.443073
PAB 1.152896
PEN 3.896324
PGK 5.099349
PHP 70.61688
PKR 320.235171
PLN 4.30659
PYG 6879.393511
QAR 4.203251
RON 5.236192
RSD 117.319073
RUB 95.527847
RWF 1698.202357
SAR 4.342555
SBD 9.29344
SCR 15.888464
SDG 691.976926
SEK 11.042047
SGD 1.475386
SHP 0.853719
SLE 28.289692
SLL 24163.709626
SOS 658.851741
SRD 43.40797
STD 23850.819565
STN 24.487269
SVC 10.087668
SYP 14982.541422
SZL 18.60984
THB 38.096767
TJS 10.664163
TMT 4.033141
TND 3.385269
TOP 2.774524
TRY 55.047529
TTD 7.818867
TWD 37.076426
TZS 3053.661295
UAH 51.51437
UGX 4276.739383
USD 1.152326
UYU 46.405471
UZS 13785.653303
VES 881.997779
VND 30014.056518
VUV 136.48471
WST 3.145838
XAF 655.610455
XAG 0.017589
XAU 0.000261
XCD 3.114219
XCG 2.077802
XDR 0.815369
XOF 655.613298
XPF 119.331742
YER 273.273944
ZAR 18.604278
ZMK 10372.318315
ZMW 21.697625
ZWL 371.048469
  • CMSC

    0.0100

    21.45

    +0.05%

  • RYCEF

    0.5500

    21.1

    +2.61%

  • NGG

    0.4100

    80.68

    +0.51%

  • RBGPF

    0.0000

    72.16

    0%

  • RELX

    -0.8200

    34.55

    -2.37%

  • AZN

    -0.2500

    158.5

    -0.16%

  • BCE

    -0.2400

    23.13

    -1.04%

  • BTI

    -0.9700

    55.84

    -1.74%

  • GSK

    -0.6000

    50.3

    -1.19%

  • RIO

    0.2300

    101.22

    +0.23%

  • VOD

    0.1900

    16.09

    +1.18%

  • CMSD

    -0.0400

    21.59

    -0.19%

  • BCC

    -1.2800

    84.25

    -1.52%

  • BP

    -0.2300

    42.93

    -0.54%

  • JRI

    -0.0200

    12.71

    -0.16%


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.