A government elected on competence and stability may now gamble both to stave off internal revolt. For investors, the message is that British politics has not regained the calm that markets briefly hoped for, says Helen Thomas

The markets once again have a starring role on the stage of political intrigue. Allies of the Prime Minister have invoked their mysterious power in an attempt to ward off the threat from wannabe challengers to Keir Starmer, intoning that an internal Labour coup could “destabilise the financial markets”. The threat was clear although the logic is backward. It is not that moving against Starmer risks another Truss-style meltdown; rather that the briefing itself will prove more destabilising than the threat it sought to head off. Markets must now price in an ever more beleaguered premier who will soon be replaced.

Downing Street’s fire was directed squarely at health secretary Wes Streeting, long regarded as Labour’s young pretender. Hearing his name in the frame as the next PM is no surprise, but hearing it from No10 smacks of panicked desperation rather than steady strength. Particularly when the leakers specifically briefed that he has the tacit support of “up to 50 frontbenchers”, lending an air of fearful credibility to the entire story.

Streeting’s spokesman was forced into a rapid rebuttal, insisting that any plotting was “categorically untrue”. Yet the damage was done. When a government starts naming its internal suspects, it reveals more about its own fragility than that of its enemies.

By tethering his survival to “market stability”,........

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