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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
So England’s cricket team couldn’t win an egg cup, let alone the Ashes. There have been the usual quibbles about the New Year’s honours list. The prime minister celebrated the return of an Egyptian-UK national, just before the man’s vile tweets resurfaced to embarrass the government. We start the year amid a gloom that our national character almost relishes. It bodes ill for Labour and Conservative politicians who hoped that this year might see insurgent parties fade and “normal service” resume.
Ordinarily, 2026 would be merely a dull midpoint in the stumbling journey of an unpopular government. But May’s Scottish, Welsh and local elections will be more like US midterms in their resonance. This year will decide the fate of Sir Keir Starmer’s premiership, bring new tests of the vital relationship with America and make or break the Conservative party.
Regicide is in the air, even though Labour’s rule book makes it hard to remove a leader. Predictions for May have Labour in third place in Wales and in Scotland, where its resurgence only two years ago was key to winning the general election. In England, many of its councillors fear local losses. Downing Street is so frit that it has taken the outrageous and anti-democratic step of delaying four mayoral elections and giving 63 councils the chance to postpone local elections.
Even with such gerrymandering, the strength of polling for Reform UK means that Starmer has at best five months to explain what his government is for. His New Year message promising to defeat “decline and division” would be more convincing if that wasn’t what his government has wrought.
Repeated U-turns on domestic policy have kept him in office but not in power, even though some reversals — most recently on inheritance tax for farmers — have been a welcome admission that the policy was ill-conceived. Regaining the initiative would require a radical move: opening negotiations to rejoin the EU customs union, perhaps, or implementing dramatic reforms to asylum. It has not helped Starmer that he often looks as though the government is being run as a riposte to Nigel Farage, rather than because it believes in anything.
The same is true of Kemi Badenoch, Conservative leader. If May’s elections cement the view in the electorate’s mind that Reform UK is the most likely rightwing alternative to Labour, her party is probably finished. Badenoch’s original approach of gradual, thoughtful policy development no longer makes sense: time is running out. The party has so far lost few serious defectors to Reform, but councillors and talented potential candidates are wavering.
Badenoch has become a more convincing public performer. But her style is still too hectoring and her proposition unclear. On immigration, the Tories will only ever sound like a pale echo of Reform. Their only hope is to look like the grown-ups. They should have backed the government’s limited welfare reforms, not opposed them. They should have loudly attacked Labour’s postponement of elections (as the Liberal Democrats did), not quietly gone along with it. In the next few months, they should hammer home a strong, convincing message on economic growth and fiscal responsibility. The government has vacated that territory and Reform UK has not convincingly filled it.
Any pact with Reform UK won’t come until much closer to the general election, if at all. And Farage’s party is still far from being a credible government in waiting. But it has moderated its promise of tax cuts. Farage has also started to look, for the first time in his career, as though he really wants power. He built momentum by spending the summer campaigning while other party leaders went on holiday.
While deeply galling, there is an uncomfortable kernel of truth in the critique that the two old parties are a “uniparty” which has prioritised elites over lower-income voters.
This populist message is being powerfully channelled by Reform from the right and the Greens from the left. Under Zack Polanski, the Greens could overtake Labour in the polls this year. Labour MPs would then demand a shift left, deaf to the weakness of their mandate: their landslide was based on a mere 34 per cent of the vote, less than the combined share of the Tories and Reform UK.
As Harold Macmillan didn’t quite say, it’s the events that get you. Abroad, Starmer has looked more confident and pragmatic than at home. But if Donald Trump’s lawsuit against the BBC is approved by a Florida court, ministers will face a huge diplomatic and financial problem, just when they should be progressing the stalled US-UK technology deal. Continued Russian attacks on UK military satellites and threats to undersea cables could expose our defensive weaknesses. The public know we can’t control our borders; they don’t yet know how limited our capability to intercept a ballistic missile might be.
One thing is clear: piling on the misery isn’t going to work. At the Budget, most voters thought the UK was already in a recession. They need a happier new year.