Published by Global Banking & Finance Review®
Posted on February 8, 2026
2 min readLast updated: February 8, 2026
Add as preferred source on GoogleKeir Starmer faces a major crisis over appointing Peter Mandelson as US ambassador, with controversy surrounding Mandelson's past ties to Jeffrey Epstein.
LONDON, Feb 8 (Reuters) - A senior minister faced questions about British Prime Minister Keir Starmer's future on Sunday and the deputy prime minister appeared to break ranks with his boss over his decision to appoint Peter Mandelson as ambassador to the United States.
Starmer is facing what is widely seen as the biggest crisis of his 18 months in power over his decision to make Mandelson Britain's ambassador to Washington in 2024, with a handful of his own lawmakers openly questioning his judgment and future.
New evidence about Mandelson's relationship with Jeffrey Epstein came to light last week, opening an old wound for Starmer and his Labour Party, as the extent of Mandelson's ties to the late sex offender came to light as well as his alleged willingness to leak government business.
Work and pensions minister Pat McFadden was asked about Starmer's position by broadcasters on Sunday. He acknowledged there was a chance Starmer might not continue in the role.
"If the Prime Minister stays there, I don't think that would make any difference at all," McFadden told the BBC.
The Telegraph newspaper, citing friends of Deputy Prime Minister David Lammy, reported on Sunday that Lammy -- who was foreign minister at the time of Mandelson's appointment -- had warned Starmer against nominating him.
When asked if Starmer's leadership was in big trouble, McFadden said the Labour Party should support Starmer as it was not good for the country to keep changing prime minister every 18 months to two years.
"I appreciate this has been a week of terrible headlines," he added.
As well as Lammy, Angela Rayner, his predecessor as deputy prime minister, has also told friends she warned Starmer not to put Mandelson in the job, according to the Times newspaper.
Starmer sacked Mandelson last September over his links to Epstein. Mandelson is now under police investigation for alleged misconduct in office.
(Reporting by Sarah Young; Editing by Aidan Lewis)
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, often leading to a loss of confidence in the economy.
A central bank is a national institution that manages a country's currency, money supply, and interest rates, and oversees the banking system.
Financial stability refers to a condition where the financial system operates effectively, maintaining confidence and avoiding crises.
An ambassador is a high-ranking official who represents their country in diplomatic matters and is responsible for maintaining international relations.
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