Chancellor Rachel Reeves has warned that a Labour leadership contest could plunge the UK 'into chaos' and threaten the economic recovery, after official figures showed the economy grew at its fastest pace in a year in the first quarter of 2026. Speaking to the BBC, Reeves argued that the government's plan to grow the economy is starting to bear fruit, citing unexpected growth in March despite the onset of the Iran war.
Reeves seized on data from the Office for National Statistics showing gross domestic product rose by 0.3% in March, significantly beating economists' forecasts of a 0.2% contraction. She said this proves the government has 'the right economic plan' and warned that 'now is not the time to put our economic stability at risk'. Her comments came amid speculation that health secretary Wes Streeting might trigger a leadership race against Prime Minister Keir Starmer.
However, economists cautioned that the March figure might represent a peak for the UK economy this year, as the Iran war pushes up energy prices and disrupts supply chains. Meanwhile, British government borrowing costs fell to a three-day low after Streeting resigned but did not trigger a contest, with ten-year gilt yields dropping 5 basis points to 5.01%.
In other economic news, food ingredients firm Tate & Lyle received a takeover approach from US rival Ingredion Incorporated, valuing the company at around £2.7 billion. Separately, Jaguar Land Rover reported a 99% slump in annual profit to just £14 million, hit by US tariffs and a cyber-attack that disrupted factories for months. In the US, initial jobless claims rose by 12,000 to 211,000 last week, though levels remain historically low.
