Prime Minister Keir Starmer announced he will remain in office despite suffering significant losses in local elections across England, Scotland and Wales. The elections represented the largest electoral test for Starmer since he became prime minister in 2024.

Financial markets responded positively to Starmer's commitment to stay in his role, with sterling and government bonds rallying following his statement. UK gilts saw gains as investors appeared reassured by the political stability indicated by Starmer's decision.

The local election results dealt a substantial blow to what sources described as the "big two" political parties, with the scale of defeats prompting calls for serious policy action. The voting was seen as a critical measure of public sentiment toward the current government's performance.

Separately, South East Water chief executive David Hinton resigned following widespread criticism over water outages that affected tens of thousands of households across Kent and Sussex. The resignations came after significant service disruptions left customers without water supply.

The election results and subsequent market reaction highlight the ongoing challenges facing the UK government as it navigates both domestic policy issues and economic pressures. Starmer's decision to remain in position suggests an intention to push forward with current policies despite the electoral setback.