UK Prime Minister Keir Starmer has stepped down from his position, marking a significant political development in the United Kingdom. The resignation represents a major shift in British political leadership.

Resignation Details

Keir Starmer has vacated the office of Prime Minister of the United Kingdom. No additional details regarding the circumstances, timing, or transition arrangements have been provided in the available source data at this stage.

The Bank of England (BoE) held its key interest rate steady at 3.75% at its June meeting, matching both the previous rate and market estimates. The decision aligns with expectations from economists and market participants, who had widely anticipated a hold amid persistent inflationary pressures and ongoing global energy market disruptions. LSEG data had indicated a 95% probability of no change ahead of the announcement, while economists at ING Think had anticipated a 7-2 vote in favor of holding rates.

The rate decision comes against a backdrop of UK inflation holding steady at 2.8% in May, unchanged from the previous month. The Office for National Statistics (ONS) reported that rising transport costs offset lower food prices, with air fares rising by 10.3% between April and May, reversing a 5.0% decline during the same period in 2025. Motor fuel prices jumped by 24.6%, the fastest pace since September 2022, reflecting supply-chain tightness and the UK's exposure to global refined-product markets.

Energy Market Disruptions Driving Inflation

The US-Israeli war on Iran has kept UK inflation almost a percentage point higher than the BoE had forecast, effectively re-tightening global energy markets. UK crude oil input prices rose by 71.8% in the year to May, compared with 76.8% in April. Chancellor of the Exchequer Rachel Reeves stated that the conflict is disrupting energy markets, supply chains, and pushing up costs for businesses across the country.

In response to higher energy prices, the UK's Department for Business and Trade issued a General Trade License on May 20, permitting imports of Russian-derived diesel and jet fuel processed in third countries such as India or Turkey. The move drew criticism from Conservative Party Leader Kemi Badenoch, while Prime Minister Keir Starmer defended the decision as necessary to protect British consumers.

Broader Economic Context

The British economy contracted by 0.1% in April, marking the first monthly fall since August, while industrial production stalled following a 0.2% year-on-year contraction in March. The OECD forecasts that the British economy will slow from 1.4% in 2025 to 0.9% in 2026, before recovering to 1.1% in 2027. The organization warned that disruptions to shipments through the Strait of Hormuz and damage to energy infrastructure have triggered sharp rises in energy prices, feeding into inflation pressures and weighing on household demand.

The following table summarises the key economic indicators shaping the BoE's latest rate decision: