UK Prime Minister Keir Starmer attempts government reset less than 100 days into office

LONDON — British Prime Minister Keir Starmer is seeking to reset his government and recover from a shaky first 100 days in office beset by policy misfires, doom mongering and a "freebie" scandal.

Over the weekend, Starmer conducted a shake-up of his office in No.10, after his Chief of Staff Sue Gray was forced to quit amid criticism over her performance and management style, as well as a furor over pay.

Gray, who was hired by Starmer in 2023 to help him prepare for government, was replaced by Morgan McSweeney, who led the Labour party's winning election campaign. Another two figures were added as deputy chiefs of staff.

Meanwhile, Downing Street's media relations team was bolstered with the appointment of James Lyons, recently head of policy communications at TikTok, who will lead a new team in the wake of backlash over gifts and "freebies" received by Starmer and other senior ministers.

Now more than three months on from the election, and with the Labour administration still light on policy details, analysts have begun to question whether the overhaul will be enough for Starmer to show that he has a plan for government.

"They still don't have any discernible policy platform or direction, so the ship is essentially at sea without direction," Phillip Blond, director of independent, non-partisan public policy thinktank ResPublica, told CNBC via email.

"Having better crew members will help but it can't cover up the lack of a destination," he added.

Tony Travers, visiting professor at the London School of Economics, noted that Starmer will have a steep hill to climb to reassert control after allowing infighting to perpetuate under his watch.

"A challenge for the prime minister lies in the fact No. 10 got out of control in the first place," Travers said via email.

"All 'private offices' are different and they regularly go wrong. Keir Starmer now needs to show he's got control," he added.

All eyes are now on the forthcoming Autumn Budget due out on Oct. 30, when Finance Minister Rachel Reeves is expected to outline her spending plan for the new government.

Both Starmer and Reeves tried to walk back on negative rhetoric over the state of the U.K. economy at the Labour Party conference last month, saying that the country was poised for a period of national renewal.

Reeves has even suggested watering down tax rises for private equity bosses and aborting plans to scrap the U.K.'s controversial non-dom status, amid concerns that implementing such measures would spark a wealth exodus.

Meanwhile, the finance minister has talked up plans to boost investment, including by way of a new national wealth fund and possible changes to pensions rules, in a bid to encourage growth as speculation grows around possible changes to the U.K.'s debt rule. Labour had previously committed to a fiscal rule set by the former Conservative government, which stated that debt must fall as a share of gross domestic product (GDP) within a five-year horizon.

Nevertheless, negative sentiment has weighed over the country since Starmer warned of "tough decisions" ahead, after the Treasury discovered a £22 billion ($29 billion) "black hole" in the public finances allegedly inherited from the Conservative Party. Former Finance Minister Jeremy Hunt has denied the claims as "fictitious."

Analysts at Citi said in a note on Monday that the government would need to move quickly to enact its growth plan for the country.

"The U.K. is approaching a make-or-break moment. A transition from the low growth, low investment equilibrium is increasingly urgent," they wrote.

New research released Monday by KPMG and the Recruitment & Employment Confederation showed that British businesses have put hiring on hold because of uncertainty over the government's plans on tax, industrial strategy and workers' rights.

Last month consumer confidence tumbled the most since Russia's invasion of Ukraine, even as a drop in interest rates has eased pressure on households, according to GfK data.