The FTSE 100 experienced a decline on Monday, as investors concentrated on the escalating political crisis in Britain. Concurrently, bank stocks faced downward pressure, with NatWest at the forefront of the declines following its agreement to acquire wealth manager Evelyn Partners. The blue-chip FTSE 100 fell 0.13% as of 1105, easing from record highs touched last week. The FTSE 250 midcap index was little changed. British Prime Minister Keir Starmer’s chief of staff, Morgan McSweeney, resigned on Sunday, stating he accepted responsibility for recommending that Starmer appoint Peter Mandelson as ambassador to the U.S., notwithstanding Mandelson’s established connections to sex offender Jeffrey Epstein.

Polls indicate that Starmer faces significant unpopularity among voters following a sequence of notable U-turns, leading some within his own party to publicly scrutinize his judgment and prospects. Recent increases in longer-dated borrowing costs indicate that traders anticipate a potential ousting of Starmer. Political pressure is mounting on Starmer to step down. “If we do get a shift in the premiership, the replacement is likely to be from the pro Left camp, which would weigh on the currency and long-term bond yields,” stated economist Mohit Kumar.

The FTSE 100 experienced pressure as NatWest Group saw a decline of 5.5% following its agreement to acquire Evelyn Partners, one of Britain’s largest wealth managers, for a total of 2.7 billion pounds, inclusive of debt. UK banks overall fell 1.2% as investors priced in more rate cuts from the British central bank. The Bank of England maintained its interest rates last week, following a surprisingly close 5-4 vote, and indicated that borrowing costs may decrease should inflation persist in its decline.

This week’s data, encompassing January retail sales and December GDP figures, may provide additional insight into expectations regarding monetary policy.  Among other stocks, Greggs fell 5% after Jefferies warned that weight-loss drugs could curb sales growth by reducing demand from the bakery chain’s customers. Plus500 rose 5.4% to touch a record high after the online trading platform forecast 2026 results ahead of market expectations.