The Starmer leadership crisis has sharpened overnight. Eleven Labour-affiliated unions — including Unite, Unison and the GMB — are expected to issue a joint statement today saying the party “cannot continue on its current path” and that at some stage it will need to elect a new leader. That is a significant escalation. The unions aren’t calling for an immediate contest, but their public signal that Starmer won’t lead Labour into the next election removes a major pillar of his support base. Wes Streeting met Starmer at No 10 yesterday for less than twenty minutes and left without triggering a formal challenge, but allies of the Health Secretary have been calling for the PM’s resignation. The King’s Speech is today, which gives the government a legislative shop window, but the political backdrop makes it hard to read as a stable platform.

The Economist has a piece worth noting for anyone watching gilt markets: it argues directly that Labour’s leadership hopefuls need to understand the bond market cannot be tamed, only respected. The timing is pointed. Any leadership transition that involves a material fiscal loosening will face an immediate market test, and the piece is a useful reminder that the Truss episode has not been forgotten by traders even if it has been by some MPs.

On the Trump-Xi summit in Beijing — this is live now, day 75 of the Iran war by Al Jazeera’s count. The headline risk for markets is the FT’s reporting that Trump is prepared to discuss Taiwan arms sales with Xi, which would break long-standing US precedent and has already rattled Asian allies. If Washington signals it will slow or condition weapons exports to Taipei as part of a broader deal, the implications for defence sector positioning and regional risk premia are immediate. The Economist separately notes that America and China are currently acting as a buffer against an oil catastrophe by keeping Hormuz-adjacent tensions from fully spiralling, but frames the question as whether either side loses nerve before the strait reopens.

The FT flags that the Iran war is already pushing aviation fuel costs high enough to threaten low-cost carriers. If that persists through the summer travel season, watch for profit warnings from the budget end of the European airline sector.

On AI, the ChatGPT drug death lawsuit in the US is moving. A teenager died after relying on the model for harm-reduction advice on drug combinations; logs reportedly show the model gave dangerous guidance. This is the kind of case that tends to accelerate liability legislation, and the EU AI Act’s high-risk classification debates will be directly relevant to how UK regulators respond.

The King’s Speech begins this afternoon in Parliament.

Sources

Guardian, BBC News, The Economist, Al Jazeera, FT, Politico, TechCrunch, Ars Technica — 2026-05-13