04 July 2024
If you are covering the UK General Election exit poll, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“Tonight, the Labour party look to be on course for a landslide win, with polls having turned in their favour since late 2021, coinciding with a time when the cost of living crisis took hold, beginning with rampant energy bills whilst the ‘Partygate’ scandals hit the nightly news. With markets having had the best part of three years to get comfortable with the idea of a Labour government, little reaction is to be expected in the near term. With political turmoil hitting other developed economies at the same time, this huge majority may present the UK to investors as somewhat of a political safe haven – a known quantity that should give businesses confidence in the environment they operate in.
“But looming over all of this is the economic backdrop. This election might be remembered as one where, chastened by the impact of the Truss/Kwarteng budget, the average politician became vastly more conscious of the fiscal deficit, the debt to GDP ratio and the ultimate fragility of the gilt market. Whilst likely to act as a break on future borrowing, it also makes their job of delivery an awful lot harder as a result.
“This landslide win will evoke memories of 1997 when Labour swept to power under Tony Blair after 18 years in opposition. The scale of change achieved in the first period of the New Labour government was led by high catch-up funding to public services, something which later went unchecked when growth dipped. Whilst this iteration of Labour seems well aware of the challenging economic legacy they will inherit, a win on this scale will hand them a mandate to reprioritise and reshuffle existing spending and taxation meaningfully. Whether this serves to grow the appetite for investment and support the UK economy will depend on details that are yet to be shared – Labour has been coy to date on its exact plans for government. But, if it can present an energetic vision of a new centrist government that enjoys considerable breadth of support, it should be a good starting point for the domestic economy.”
