Keir Starmer led the Labour Party to a landslide victory in the UK general election on July 4th. Initially the UK stock markets (^FCHI, ^FTSE, ^SBF120) rose slightly on the news, but at the time of posting this video the excitement appears to be dying down.
In our Morning Brief, Yahoo Finance Senior Reporter Akiko Fujita discusses how the British pound has reacted to this news and Goldman Sachs’ current outlook for UK economic growth as Starmer assumes new leadership as UK Chancellor.
For more expert insights and the latest market trends, click here to listen to this entire episode of Morning Brief.
This post Luke Carberry Morgan.
Video Transcript
We celebrate the UK Labour Party’s landslide victory in the UK Prime Ministerial election. We need to know more about what this means for the markets.
Let’s talk about Yahoo Finances, Akiko Fujita.
Hi, Akiko.
Hey Brad.
Yes, we just heard from the new Chancellor, Keir Starmer, outside Downing Street expressing his hopes about how quickly the Government is likely to tackle key issues.
Now, our country has voted resolutely for change to renew our nation and return politics to public service.
Starmer has said that changing the country won’t be like flipping a switch but will take time, and that expectation is certainly being reflected in the FTSE market.
Now combine the initial profit you saw when you started trading.
Currently, the pound is rising steadily against the dollar and approaching its high for the day as investors look to political stability in the UK.
It was Labour’s first landslide victory over a Conservative majority in 14 years.
Much of this is the result of voter dissatisfaction with the governing party’s policies, but there’s no doubt that the economy has also played a key role here: just a few months ago the UK was already in the worst economic situation of the G7 countries, with little prospect of improvement, and the OECD has cut its growth forecast for the UK to just 0.4% this year and 1% next year.
Brexit, the impact of coronavirus and Russia’s invasion of Ukraine are all major factors in the economic slowdown, while voters are also angered by the housing shortage and waiting times for the National Health Service.
Among other issues, the prospect of the election has already led to a significant rating upgrade by Goldman Sachs this morning.
The investment bank now says it expects Labor’s fiscal policies to be effective.
In their words, there will be a slight boost to demand growth in the near term, raising growth forecasts by 0.1% over the next two years.
But Golden also warned about the potential risks of higher taxes and the impact they could have on investment incentives and Labor’s push to reduce net immigration.
Goldman said that could tighten the labor supply.
Outgoing Chancellor Rishi Soak acknowledged the challenges facing the UK ahead but stressed that UK inflation would return to 2% in line with countries that have banned monetary policy.
Another thing I want to point out here is that the voter turnout was 60%.
This is a near record number and while centre-left parties celebrate their victory today, let us remember Nigel Farage, he was the driving force behind Brexit.
He also had some success in the election, with his upstart right-wing Reform UK party winning many of the Conservative votes and Mr Farage becoming an MP at his eighth try, Bradley.
Thank you, Kiko, for keeping a close eye on the election results for us.
I am truly grateful.