Coin Press - UK politics: Outlook for 2026

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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.

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Long live Ukraine - Хай живе Україна - Да здравствует Украина

Es lebe die Ukraine - Да здравствует Украина - Long live Ukraine - Хай живе Україна - Nech žije Ukrajina - Länge leve Ukraina - תחי אוקראינה - Lang leve Oekraïne - Да живее Украйна - Elagu Ukraina - Kauan eläköön Ukraina - Vive l'Ukraine - Ζήτω η Ουκρανία - 乌克兰万岁 - Viva Ucrania - Ať žije Ukrajina - Çok yaşa Ukrayna - Viva a Ucrânia - Trăiască Ucraina - ウクライナ万歳 - Tegyvuoja Ukraina - Lai dzīvo Ukraina - Viva l'Ucraina - Hidup Ukraina - تحيا أوكرانيا - Vivat Ucraina - ขอให้ยูเครนจงเจริญ - Ucraina muôn năm - ژوندی دی وی اوکراین - Yashasin Ukraina - Озак яшә Украина - Živjela Ukrajina - 우크라이나 만세 - Mabuhay ang Ukraine - Lenge leve Ukraina - Nyob ntev Ukraine - Да живее Украина - გაუმარჯოს უკრაინას - Hidup Ukraine - Vivu Ukrainio - Længe leve Ukraine - Živjela Ukrajina - Жыве Украіна - Yaşasın Ukrayna - Lengi lifi Úkraína - Lank lewe die Oekraïne

Stargate project, Trump and the AI war...

In a dramatic return to the global political stage, former President Donald J. Trump, as the current 47th President of the United States of America, has unveiled his latest initiative, the so-called ‘Stargate Project,’ in a bid to cement the United States’ dominance in artificial intelligence and outpace China’s meteoric rise in the field. The newly announced programme, cloaked in patriotic rhetoric and ambitious targets, is already stirring intense debate over the future of technological competition between the world’s two largest economies.According to preliminary statements from Trump’s team, the Stargate Project will consolidate the efforts of leading American tech conglomerates, defence contractors, and research universities under a centralised framework. The former president, who has long championed American exceptionalism, claims this approach will provide the United States with a decisive advantage, enabling rapid breakthroughs in cutting-edge AI applications ranging from military strategy to commercial innovation.“America must remain the global leader in technology—no ifs, no buts,” Trump declared at a recent press conference. “China has been trying to surpass us in AI, but with this new project, we will make sure the future remains ours.”Details regarding funding and governance remain scarce, but early indications suggest the initiative will rely heavily on public-private partnerships, tax incentives for research and development, and collaboration with high-profile venture capital firms. Skeptics, however, warn that the endeavour could fan the flames of an increasingly militarised AI race, raising ethical concerns about surveillance, automation of warfare, and data privacy. Critics also question whether the initiative can deliver on its lofty promises, especially in the face of existing economic and geopolitical pressures.Yet for its supporters, the Stargate Project serves as a rallying cry for renewed American leadership and an antidote to worries over China’s technological ascendancy. Proponents argue that accelerating AI research is paramount if the United States wishes to preserve not just military supremacy, but also the economic and cultural influence that has typified its global role for decades.Whether this bold project will succeed—or if it will devolve into a symbolic gesture—remains to be seen. What is certain, however, is that the Stargate Project has already reignited debate about how best to safeguard America’s strategic future and maintain the balance of power in the fast-evolving arena of artificial intelligence.

Europe’s arms money maze

Europe’s rearmament has acquired an uncomfortable companion: uncertainty about what the money actually buys. In Germany, an argument over defence-related borrowing has raised questions about whether exceptional debt is producing genuinely additional expenditure. In Estonia, unreliable inventory records and disputed ammunition contracts have brought ministerial accountability into the foreground. These are different problems, but they meet at the same point: a larger budget is not a reliable measure of a stronger defence.The contention that nobody knows what is happening to Europe’s weapons money goes too far. Budgets are published, procurement bodies operate and auditors are identifying failures. Nor do these cases establish that funds have disappeared into Russian hands or that the Kremlin engineered the difficulties. The more defensible conclusion is also more useful: Europe cannot judge rearmament by the volume of money announced. It must establish what has been purchased, accepted and made ready for use.That distinction matters strategically. An adversary need not steal the money to benefit from delays, unusable equipment or a loss of confidence in the governments spending it.What the €800 billion actually meansThe scale of the spending is substantial. Combined defence expenditure across the European Union reached €418 billion in 2025, with €454 billion estimated for 2026. Those annual totals should not be confused with the much larger, multi-year headline attached to the EU’s rearmament financing plan. The widely cited €800 billion is potential financing capacity, not a single fund already transferred to arms manufacturers. Its main components are approximately €650 billion in possible additional national expenditure enabled by fiscal flexibility over four years, and €150 billion in loans through the Security Action for Europe instrument, known as SAFE. The loans must be repaid; the additional national spending depends on governments choosing to use the available room.These distinctions are indispensable to any honest assessment. Permission to borrow is not an order placed with a factory. An order is not a completed delivery. Equipment delivered to a warehouse is not necessarily equipment that troops can operate, maintain and replenish. Treating all these stages as interchangeable allows governments to claim progress before the military benefit exists.It also creates a temptation to add together figures that describe different periods or overlapping flows of money. A credible account of rearmament should distinguish financing arrangements from annual expenditure, and both from verified outputs. Otherwise, the public is left comparing impressive totals whose practical meaning is unclear.Germany’s argument over additional spendingOn 10 September, the Ifo Institute challenged the use of Germany’s defence-related borrowing exemption. It calculated an €11 billion gap between additional borrowing and the year-on-year increase in the relevant expenditure. Ifo’s argument was that 38.5 per cent of the additional debt had not produced additional defence and security spending, instead freeing room for other purposes in the ordinary budget. The Finance Ministry rejected the comparison as legally and methodologically flawed. The exemption concerns qualifying expenditure above one per cent of gross domestic product, rather than an increase over the previous year. Ifo, for its part, said its analysis concerned additional spending, not constitutionality.This is not evidence that €11 billion was stolen. It is a dispute over the relationship between an exceptional borrowing mechanism and the political expectation attached to it. The difference is important: an arrangement can comply with its legal design while delivering less additional expenditure than citizens understand the announcement to promise.The practical question is whether new borrowing expands defence capacity or changes the way existing commitments are financed. Those outcomes can coexist within the same budget. Refinancing an established obligation may be lawful and fiscally useful, but it should not be presented as though an equivalent amount of new military capability has been purchased. Germany’s dispute therefore points to a straightforward transparency test. Governments should identify the expenditure that would have occurred anyway, the genuinely additional commitments and the delivery milestones attached to them. Without that comparison, the argument risks becoming a contest between accounting definitions while the central question—what the armed forces actually gain—remains unanswered.Estonia’s warning from the accountsIn Estonia, the problems are more immediate. Defence Minister Hanno Pevkur announced on 2 September that he would step down, accepting political responsibility for failures exposed in defence administration and procurement. His announcement did not amount to an admission of personal corruption.The National Audit Office issued a qualified opinion concerning defence inventories valued at approximately €1.2 billion because their quantities, composition and valuation could not be established reliably. It also questioned an unexplained retrospective adjustment of €99.7 million to the previous year’s inventory figures. That does not mean €1.2 billion of weapons has vanished. An unreliable balance is not the same thing as a proven loss. It means the records are insufficiently dependable to establish what the balance represents—a serious weakness in any organisation, and particularly consequential in one responsible for military readiness.Inadequate records can obstruct decisions long before a final financial loss is demonstrated. Commanders and purchasing authorities need to distinguish usable stock from equipment awaiting inspection, repair or replacement. If those categories are unclear, another procurement decision may rest on a mistaken understanding of what is already available.Auditing is therefore more than an exercise in retrospective blame. A trustworthy inventory helps determine what must be bought next, how urgently it is needed and whether previous purchases fulfilled their purpose. Poor accounting can undermine operational planning even where no theft is established.Paid for is not the same as usableEstonia’s ammunition procurement for Ukraine illustrates a second difficulty. The audit identified disputed advance payments and warned of a potential exposure to the state budget of around €70 million. That figure describes a risk, not a final, adjudicated loss.The controversy includes contracts involving the Italian company Datasel. Pevkur described ammunition delivered under the disputed arrangements as incomplete and of insufficient quality, rather than simply non-existent. Datasel disputes the criticism and has said that goods delivered and invoiced were worth approximately €58 million against about €59 million in advances. The company’s account is a contested position, not a judicial finding.The disagreement exposes a distinction that matters beyond this particular supplier. A payment record, an invoice, the physical presence of goods and acceptance of those goods for their intended use answer different questions. A supplier may point to shipments while a purchasing authority disputes whether the contractual requirement has been met. The existence of equipment does not, by itself, resolve an argument over quality or completeness.For Ukraine, the decisive consideration is usable military support. For the public authorities financing it, the additional questions are whether payment conditions were appropriate, inspections were timely and contractual protections can recover money when performance is disputed. Those questions should be settled through evidence and the relevant proceedings, not through premature declarations of guilt.The procurement lesson is nonetheless clear. Emergency purchasing needs traceable contracts, independently verified acceptance and a dependable record linking each payment to performance. Urgency may justify faster decisions. It cannot make the distinction between an invoice and a functioning delivery disappear.An oversight system split across institutionsEurope’s defence financing does not sit within a single system of scrutiny. National budgets, EU programmes, loans and off-budget arrangements have different institutional responsibilities. The European Court of Auditors’ September review described complex governance and uneven oversight arrangements, rather than a continent-wide absence of auditing.SAFE falls within the European Court of Auditors’ remit. The European Peace Facility, outside the ordinary EU budget, has its own College of Auditors. National defence expenditure is scrutinised through national institutions. The distinction is between different mandates, not between money that is automatically checked and money that is automatically unaccountable. The difficulty arises at the joins. A public explanation may follow the announcement of a financing package, while a procurement body follows the contract and an operational authority follows the equipment. Unless those accounts can be reconciled, citizens and legislators may struggle to establish the complete journey from political promise to accepted delivery.Secrecy complicates that task, but it need not prevent it. Publishing ammunition locations or technical vulnerabilities would be irresponsible. Giving properly authorised auditors access to contracts, inspections and payment records is a different matter. The need to protect operational information should not become a general excuse for withholding financial evidence.Nor should procurement integrity be treated as a rival to speed. Clearly assigned responsibility, verifiable milestones and early checks can prevent disputes from developing into expensive attempts to recover money after the event. The relevant choice is between controls that work during procurement and explanations demanded after something has gone wrong.Where Putin could benefitThese failures do not establish that Vladimir Putin has obtained everything he wanted. A Europe that turns rising expenditure into effective forces would represent a very different outcome. There is also no demonstrated Russian role in the particular German budget dispute or the Estonian accounting and contractual problems described here.The potential advantage for Moscow is indirect. Delayed or disputed deliveries can leave the intended recipient weaker than the expenditure suggests. Confusing financial claims can make it harder to defend further commitments. A succession of procurement controversies could erode confidence not only in individual contracts, but in the wider case for supporting Ukraine and strengthening European defence.That is a strategic risk, not proof of an accomplished Russian victory. The public identification of problems is itself evidence that scrutiny exists. A minister accepting political responsibility, auditors challenging unreliable balances and a government being pressed to explain its borrowing are mechanisms through which democratic systems can correct failure. Their value depends on what happens afterwards.The answer is neither to abandon rearmament nor to shield it from criticism. Governments should report progress in terms that connect money to results: contracts awarded, payments made, equipment accepted and capabilities available, with sensitive details reserved for secure oversight. Disputed transactions should remain visible until resolved rather than disappearing beneath the next spending announcement.Europe does not need to prove its determination by producing another larger number. It needs to demonstrate that the money already committed is becoming usable strength. Until it does, the distance between those two things remains an opportunity for the adversary it is trying to deter.