Greek economist Yanis Varoufakis has warned that whoever takes over as Britain's prime minister will find their powers limited to "re-arranging the deck chairs on the Titanic."
The warning comes as Andy Burnham is now expected to take over following Keir Starmer's resignation on Monday.
In a lengthy post on X, the former Greek finance minister, who led Greece's bailout negotiations during its debt crisis, argued that Britain's so-called special relationship with Washington has less to do with history or defence than with American financiers' willingness to keep lending dollars to buy UK government debt.
Every British PM's nightmare
— Yanis Varoufakis (@yanisvaroufakis) June 22, 2026
With Keir Starmer expected to fall on his sword shortly, here is my take on the conundrum facing Andy Burnham, indeed any and every British PM.
The true nature of Britain's ‘special relationship' with the United States has far more to do with…
"This is the burden under which every UK Prime Minister must labour," he wrote.
Varoufakis said prospective leaders such as Burnham, Reform UK's Nigel Farage and Green Party figure Zack Polanski all "have a plan until the gilt market hits them," invoking Mike Tyson's famous line about plans surviving only until impact, and pointing to Liz Truss's 2022 ouster as proof of how quickly bond markets can topple a premiership.
His central argument: UK gilts are unusual because the government's ability to refinance nearly £3 trillion in public debt depends not on savers but on US-based financial institutions borrowing dollars to buy British bonds, which they then use as collateral domestically.
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"There is a world of difference between needing to borrow from savers and from relying on speculators who borrow themselves to lend you," he wrote, warning that such speculators are prone to margin calls and likely to dump bonds in a downturn rather than ride it out.
Tracing this dependency to the 1950s, when the City of London carved out a niche within the dollar-based Bretton Woods system, Varoufakis argued the arrangement has left Britain "not financially sovereign" despite printing its own currency.
He said any prime minister attempting to fund public investment while preserving this arrangement risks pushing Britain toward the IMF, which he said would mean "the permanent loss of sovereignty over tax and spending policy," as occurred in Greece.
"The question is: Do the current contenders for Britain's top job understand this?" he asked.
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