Published by Global Banking & Finance Review®
Posted on February 5, 2026
5 min readLast updated: February 5, 2026
Add as preferred source on GoogleMandelson's ties to Epstein pose a threat to UK PM Starmer, sparking controversy and questioning his leadership amid Labour Party unrest.
By Elizabeth Piper, Andrew MacAskill and Alistair Smout
LONDON, Feb 5 (Reuters) - Prime Minister Keir Starmer's appointment of Peter Mandelson as Britain's ambassador to the United States was once hailed as an inspired move to deploy a master of the "dark arts" of politics to manage relations with Donald Trump.
Just over a year later, that choice has created the biggest threat yet for Starmer, with his lawmakers questioning his judgment and leadership after emails illustrated not only the extent of Mandelson's ties to sex offender Jeffrey Epstein but his alleged willingness to leak government business.
While Starmer does not appear in any immediate danger of falling over the scandal, six Labour lawmakers said on condition of anonymity it had further weakened a prime minister challenged by an increasingly restive Labour Party.
Now even those most loyal to him suggest it is a question of when, not if, he is removed from power, with several pointing to the May local elections as a pressure point.
'SOMETHING HAS SHATTERED,' SAYS ONE LABOUR LAWMAKER
One Labour activist said the situation for Starmer was now like the children's game Buckaroo, where players stack cowboy gear onto a mule until it buckles.
"You know it's all going to collapse for Starmer at some point," the activist said.
A Labour lawmaker said that after months of policy U-turns and missteps over donations, the Mandelson scandal "feels like something has shattered and that will be impossible to recover".
The Eurasia Group, a political risk consultancy, put the probability of Starmer's removal this year at 80%, up from 65% previously, saying it had dealt "irreparable damage".
All six Labour lawmakers from different wings of the party said the appointment of Mandelson, dubbed the 'prince of darkness' by British media for his behind-the-scenes manoeuvring, had irreversibly tarnished a prime minister who came to power with a pledge to clean up politics.
It was never meant to be this way.
When Mandelson, 72, a minister when Labour was last in power more than 15 years ago, was appointed in late 2024, Starmer said the veteran brought "unrivalled experience to the role".
His work as a former aide and minister to former prime ministers, Tony Blair and Gordon Brown, and as the EU's trade commissioner was touted by the government as being "crucial" to deepen Britain's relationship with the United States.
And Mandelson, the first political appointee to the position in almost half a century, was praised for helping to secure the first deal with the U.S. to lower some of Trump's tariffs on sectors such as cars.
But for the man who was known to have been an acquaintance of Epstein and of other wealthy individuals such as businessman Oleg Deripaska, who is now under sanctions over Russia's war in Ukraine, the post was always risky.
Mandelson denied granting favours to the Russian businessman while he was European trade commissioner.
Files released by the U.S. Justice Department last week included emails suggesting Mandelson had leaked discussions on possible UK asset sales and tax changes to Epstein during the financial crash, and that Epstein had recorded payments to Mandelson or his then-partner, now husband.
Mandelson has said he does not recall having received payments. He has not commented publicly on allegations he leaked documents, and did not respond to messages seeking comment.
He was sacked as ambassador in September 2025 and is now under police investigation for alleged misconduct in office.
STARMER SAYS HE WAS LIED TO
Starmer has defended his own actions, accusing Mandelson of creating a "litany of deceit" about his Epstein ties and promising to release documents on how he was appointed.
"I share the anger that people feel when powerful individuals appear to escape scrutiny," Starmer said.
Starmer's attempts to move on from the scandal have proven futile - at a press conference on Thursday, almost every question was about how he failed to see the jeopardy of Mandelson's appointment, even though he was forced out of government twice under Blair over earlier allegations of misconduct.
"It had been publicly known for some time that Mandelson knew Epstein, but none of us knew the depth and the darkness of that relationship," he said.
That defence has done little to quell anger in Labour, which after winning a large majority in the July 2024 national election, has seen its grip on power falter after major policy U-turns.
British borrowing costs have also risen, suggesting investors think Starmer may be forced out.
The anger of several Labour lawmakers was focused on Starmer's closest adviser, Morgan McSweeney, defended by Starmer as being "an essential part of my team".
He has been blamed for presiding over a Downing Street operation which, they say, has failed to provide a firm narrative about how the government wants to change Britain.
Another Labour lawmaker said they thought Starmer would last until the May local elections, but would be vulnerable after.
"Either way he and Morgan are both now very badly damaged."
(Writing by Elizabeth PiperEditing by Alexandra Hudson)
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, leading to a loss of confidence and potential economic downturn.
The UK economy refers to the economic system of the United Kingdom, characterized by a mix of private and public enterprises, with significant contributions from services, manufacturing, and trade.
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