In the end, the electorate spoke, and demanded change. Sir Keir Starmer executed a winning strategy, capturing 411 seats out of 650 (excluding the Speaker’s), an increase of 209 on Labour’s 2019 tally. But really, the tale told was the collapse of the Conservative Party, which held 121 seats and lost 244, with several high-profile former Cabinet members among the casualties.
Even so, pollsters overstated support for Labour considerably. The final week’s numbers suggested Labour would win 45% of all votes; on the day, they garnered just 34%. Moreover, while Labour’s campaign mastered the vagaries of our first-past-the-post system, its mandate could prove weaker than its majority suggests, as British politics appears far more fragmented now than in recent memory.
The stock market response post-election was muted, bordering on indifference. But then, markets crave certainty. It’s early days, but housebuilders have rallied on the back of the new administration’s commitment to delivering 1.5 million new privately-built homes over its five-year term. Elsewhere, however, Labour’s manifesto looks light on detail, a feature the Institute of Fiscal Studies (IFS) seized on during the campaign. IFS Director Paul Johnson warned both parties had “ducked” painful choices of either higher taxes or worse public services in their manifestos and, looking in Labour’s direction, wondered “How they will square the circle in government, we do not know.”
We should find out in the coming months. We don’t expect Rachel Reeves to deliver her first Budget until the Autumn. In the meantime, the Chancellor has instructed the Treasury to review Conservative spending to “understand the scale of the challenge” and prepare the groundwork for difficult choices. Reeves will hope inflation stays close to the Bank of England’s 2.0% target and that rate cuts are on its agenda for Autumn or, indeed, sooner.
With the new political landscape forming over the summer months, now might prove a good juncture to reflect, review current financial plans and objectives, and reposition where necessary. We are here to offer tailored, insightful and expert advice on the best course of action. Click here to arrange a free initial consultation.
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