Mick Lynch, one of the UK’s most influential union leaders in recent history, has announced he is retiring.

Mr Lynch is stepping down from the helm of the RMT (Rail Maritime and Transport Workers) union aged 63.

He served as general secretary since 2021.

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Under his leadership, the union waged years of strike action over pay and conditions before accepting a deal with the new Labour government this summer.

The rail strikes by RMT members were part of the wave of industrial action that meant 2022 had the highest number of strike days since 1989.

Walkouts began in June 2022 and did not officially conclude until September 2024.

“It has been a privilege to serve this union for over 30 years in all capacities, but now it is time for change,” Mr Lynch said.

He will remain in post until a successor is appointed in May, the RMT said.

Why’s he retiring?

No reason was given for his departure but Mr Lynch said there was a need for change and new workers to fight.

“There has never been a more urgent need for a strong union for all transport and energy workers of all grades, but we can only maintain and build a robust organisation for these workers if there is renewal and change,” he said.

“RMT will always need a new generation of workers to take up the fight for its members and for a fairer society for all”.

A career of organising

Mr Lynch first joined the RMT in 1993 after he began working for Eurostar. Before being elected secretary general at the top of the organisation he worked as the assistant general secretary for two terms and as the union’s national executive committee executive, also for two terms.

As a qualified electrician, Mr Lynch helped set up the Electrical and Plumbing Industries Union (EPIU) in 1988, before working for Eurostar and joining the RMT.

He had worked in construction and was blacklisted for joining a union.

“This union has been through a lot of struggles in recent years, and I believe that it has only made it stronger despite all the odds,” Mr Lynch said.

An intervention by the chancellor to help shore up flagging financial market confidence in the UK economy has been ruled out by the government, amid further declines in the value of the pound.

Sterling fell to its lowest level against the dollar since November 2023 early on Thursday, building on recent losses.

A toxic cocktail of concerns include budget-linked flatlining growth, rising unemployment and the effects of elevated interest rates to help keep a lid on rising inflation.

They have also been borne out by a leap in UK long term borrowing costs, which hit levels not seen since 1998 earlier this week.

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It piles pressure on the chancellor because it signals that investors are demanding greater rewards in return for holding UK debt, adding unwelcome costs to Ms Reeves who is borrowing money to invest in public services in addition to the budget tax burden on business and the wealthy.

The Tories were granted an urgent question in the Commons this morning which urged her to account for the shift in the market reaction to her budget, which critics have warned will only harm investment, jobs, pay and lead to higher prices.

Treasury minister Darren Jones, who was sent to reply on her behalf, told MPs there were no plans for further commentary beyond a Treasury statement issued on Wednesday which defended the government’s approach.

Shadow chancellor Mel Stride urged Ms Reeves to cancel her forthcoming, and long-planned, trade trip to China to allow for a change of course to recover market confidence.

He claimed Britons are having to “pay the price for yet another socialist government taxing and spending their way into trouble”.

Mr Jones responded that he would take no lessons on managing the economy from the Conservatives.

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Liberal Democrat leader Ed Davey demanded an emergency fiscal statement to parliament that cancelled the National Insurance hike planned for April to boost economic growth and bring interest rates down.

In addition to the strain on sterling over Mr Reeves’s tax and spending plans, the effect on the pound has been intensified by a strengthening dollar due to shifting market expectations of fewer US interest rate cuts this year.

Sterling is trading at $1.22 – a level last seen in November 2023.

The spot rate had stood as high as $1.34 in September.

It has also fallen sharply however against other countries’ currencies.

The pound is a cent down versus the euro at €1.19 on the start of the week, falling six tenths of a cent in today’s market moves.

Long-term bond yields, which reflect perceived risk, hit their highest level since 1998 this week and other benchmark gilt yields are heading north too.

Additional borrowing costs make it more expensive for Rachel Reeves to service the debt she is taking on.

It may mean she faces a choice between more tax rises – something she had previously ruled out – or spending cuts as higher borrowing costs take their toll.

The Treasury said in its statement: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the Government will have an iron grip on the public finances,”

“UK debt is the second lowest in the G7 and only the OBR’s forecast can accurately predict how much headroom the government has – anything else is pure speculation.

“Kick-starting economic growth is the number one mission of this Government as we deliver on our Plan for Change. Over the coming weeks and months, the Chancellor will leave no stone unturned in her determination to deliver economic growth and fight for working people.”

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But Matthew Ryan, head of market strategy at global financial services firm Ebury, said of the market moves: “This is a damning indictment of Labour’s fiscal policies, particularly the hike to employer NI (National Insurance) contributions, which businesses have already warned will lead to higher prices and a worsening in labour market conditions.

“We see wide ranging repercussions of this bond market sell-off. On the one hand, weak demand for UK debt raises the risk of either government spending cuts or further tax hikes to balance the country’s finances, neither of which would be positive for growth.

“Elevated gilt yields are also likely to be reflected in higher mortgage rates, which would provide a further squeeze on household disposable incomes.

“These worries have placed a high premium on UK assets, and we would not rule out additional downside for sterling as a result.”

How worried should Rachel Reeves be about the fact that the interest rates on government bonds have leapt to the highest level in more than a quarter of a century?

More to the point, how worried should the rest of us be about it?

After all, the interest rate on 30-year government bonds (gilts, as they are known) hit 5.37% today—the highest level since 1998. The interest rate on the benchmark 10-year government bond is also up to the highest level since 2008.

Higher government borrowing rates mean, rather obviously, that the cost of all that investment Keir Starmer has promised in the coming years will go up. And since these rates reflect longer-term expectations for borrowing costs, in practice it means everything else in this economy will gradually get more expensive.

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There are short-term and long-term consequences to all of this. In the short run, it means it will be harder for Ms Reeves to meet those fiscal rules she set herself. Back at the budget, she left herself a (in fiscal terms) paper-thin margin of £9.9bn not to overshoot on borrowing vs her new rules.

According to Capital Economics, based on recent market moves, that margin might now have been eroded down to around £1bn.

And, given that’s before the Office for Budget Responsibility (OBR) has even decided on changes to its forecasts, it’s now touch and go as to whether Ms Reeves will meet her fiscal rules. As my colleague Sam Coates reported this week, the upshot is the Treasury is poised to pare back its spending plans in the coming years – a depressing prospect given the chancellor only just set them. But that won’t be clear until the OBR’s updated forecasts are published in March.

However, fiscal rules and political embarrassments are one thing – the bigger picture is another. And that bigger picture is that the UK is being charged higher interest rates by international investors to compensate them for their concerns about our economic future – about rising debt levels, about the threat of higher inflation and about fears of sub-par growth in the years to come.

How does this compare to the Liz Truss mini-budget?

But perhaps the biggest question of all is whether, what with long-term bond yields higher now (over 5.2%) than the highs they hit in October 2022, after the infamous mini-budget (4.8%), does that mean the economy is in even more of a crisis than it was under Liz Truss?

The short answer is no. This is nothing like the post mini-budget aftermath. Investors are concerned about UK debt levels – yes. They are repricing our debt accordingly. There was even a moment for a few days after the budget last autumn when the yields on UK bonds were behaving in an erratic, worrying way, rising more than most of our counterparts.

But – and this is the critical bit – we saw nothing like the levels of panic and concern in markets that we saw after the mini-budget. But don’t just take it from me. Consider two data-based metrics that are pretty useful in this case.

The first is to consider the fact that back in October 2022 it wasn’t just that the interest rates on government bonds were rising. It was that the pound was plummeting at the same time. That’s a toxic cocktail – a signal that investors are simply pulling their money out of the country. This time around, the pound is pretty steady, and is far stronger than it was in late 2022, when it hit the lowest level (against a basket of currencies) in modern history.

Is this just a UK problem?

The second test is to ask a question: is the UK an outlier? Are investors looking at this country and treating it differently to other countries?

And here, the answer is again somewhat reassuring for Ms Reeves. While it’s certainly true that UK government bond yields are up sharply in recent weeks, precisely the same thing is true of US government bond yields. Even German yields are up in recent weeks – albeit not as high as the US or UK.

In other words, the movements in bond yields don’t appear to be UK-specific. They’re part of a bigger movement across assets worldwide as investors face up to the new future – with governments (including the UK and the US under Donald Trump) willing to borrow more and spend more in the future. As I say, that’s somewhat reassuring for Ms Reeves, but I’m not sure it’s entirely reassuring for the rest of us.

One way of looking at this is by measuring how much the UK’s bond yields deviated from those American and German cousin rates in recent months. And while there was a point, a few days after Ms Reeves’ Halloween budget, when UK bond yields were more of an outlier than they historically have been after fiscal events, in the following weeks the UK stopped being much of an outlier. Yes, it was being charged more by investors, but then given the budget involved large spending and borrowing increases, that’s hardly surprising.

Now compare that with what happened after the mini-budget, when the UK’s bond yields deviated from their counterparts in the US and Germany more than after any other fiscal event in modern history – a terrifying rise which only ended after Kwasi Kwarteng stood down. Only when Ms Truss resigned were they back in what you might consider “normal” territory.

Now, it’s hard to compare different historical moments. The mini-budget was happening at a tense moment in financial markets, with the Bank of England poised to reverse its quantitative easing. Not all of the roller coaster can be attributed to Ms Truss. Even so, comparing that period to today is night and day.

Investors are not exactly delighted with the UK’s economic prospects right now. They’re letting this be known via financial markets. But they’re certainly not horrified in the way they were after the mini-budget of 2022.