Sir Keir Starmer is likely to be ousted from 10 Downing Street before the end of July, a top investment bank has predicted. Analysts at Jefferies said there is a 60% chance of the embattled Prime Minister being forced out by the summer.
They also warned that Labour is set to shift to the Left regardless of whether there is a new leader or not. They wrote in a strategy note: “If Starmer stays, it is likely to be through concessions to the left-leaning camp of Labour. If Starmer goes, he is likely to be replaced by a left-leaning candidate."
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The analysts said the recent turbulence which saw the PM cling to power has left them "concerned about the fiscal picture in the UK”.
And they warned that a lurch to the Left would be negative for the public finances and growth.
They said: “Unfortunately, we are at a stage where further tax rises are becoming counterproductive and would be a negative for growth. Spending cuts would also be negative for growth."
It comes after Sir Keir faced the biggest crisis of his premiership so far earlier this month amid the scandal over Lord Peter Mandelson being appointed as US ambassador despite his links to billionaire paedophile Jeffrey Epstein.
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The Prime Minister was publicly urged to resign by Scottish Labour leader Anas Sarwar, but managed to stay on after his Cabinet rallied around him.
Sir Keir is likely to face fresh jeopardy if Labour loses the upcoming Gorton and Denton by-election and if the party suffers a bloodbath at the May elections.
But he insisted over the weekend that he will lead Labour into the next general election.
He told a Sunday newspaper: "I won the leadership of the Labour Party when people said I wouldn't. I changed the Labour Party when people said I couldn't. I won an election when people said we wouldn't.
"And now I intend to change the country - whatever other people say."