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The UK General Election: A New Dawn for Labour and UK Markets?

Read our first take as Keir Starmer hails historic Labour victory and Conservatives sink to worst-ever result.

Written by Harinder Hundle

The UK General Election: A New Dawn for Labour and UK Markets?

5 July 2024

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In the wake of the UK General Election, we find ourselves at the cusp of significant political and economic shifts in the United Kingdom. Sir Keir Starmer’s Labour party has emerged victorious with a substantial majority, marking a pivotal moment in the nation’s political history. For our clients, understanding the implications of this outcome is essential for navigating the investment and tax landscape ahead. This update will cover the election results, what to expect next, the market reaction, and the implications for the Conservative Party following their historic defeat.


Labour’s triumph in this election is monumental. At the time of writing, they had secured 411 out of 650 seats in the House of Commons. This victory signifies a dramatic shift in the UK’s political landscape, with the Conservatives suffering their worst defeat in history, reducing their seat count to 119 with only a handful of seats left to declare. The public’s frustration with the Conservative government, linked to perceptions of incompetence and chaos, played a crucial role in this outcome. The rise of Nigel Farage’s Reform UK further split the right-wing vote, exacerbating the Conservative decline.


As Starmer prepares to take office, his immediate tasks include forming a cabinet, addressing public service crises, and initiating key policy changes. The new government is set to focus on reversing controversial policies such as the Rwanda asylum scheme and implementing reforms in energy and healthcare sectors. Internationally, Starmer will signal a more collaborative stance with allies at upcoming summits, emphasising national security and support for Ukraine. As our Head of Wealth Structuring Andrew Sams wrote recently, Labour also announced a number of tax policies as part of their manifesto, including their intention to abolish non-dom status, tax carried interest as income, and charge VAT on private school fees. The timing of these policies is not clear at this stage.

Labour’s majority in the House of Commons is huge, however in many ways this was an election that the Conservatives have lost rather than one Labour have won. Labour’s victory was delivered on a vote share that was much smaller than the 40% achieved by Jeremy Corbyn in 2017, and turnout was close to a record low, signalling the public’s dissatisfaction with mainstream politics.


The initial market reaction to Labour’s victory has been positive, particularly for domestic UK stocks and the pound. The FTSE 250 index, which is more representative of the UK economy than the FTSE 100, experienced a notable rise, reflecting investor optimism. The pound has also shown resilience, suggesting a potential shift in sentiment amidst global political uncertainties.

Despite concerns over potential higher taxes and changes to non-dom rules, we maintain a positive outlook for the UK economy and markets. The political stability offered by Starmer’s government, coupled with historically low market valuations, presents significant opportunities for investors. The mood within the financial community has been one of cautious optimism, with many seeing Labour as capable of delivering steady governance. The focus will be on maintaining fiscal responsibility, particularly with respect to the gilts market, which will be a critical area for the new administration to manage.


Keir Starmer’s leadership marks a return to a more centrist, pro-business agenda, which should reassure markets and investors. His commitment to working with businesses to stimulate growth, reform planning, and invest in green technology is supportive of our positive outlook for the UK. However, we have reservations about potential tax increases, including the wider ranging changes applicable to non-domiciled individuals and greater taxation of private equity executives, which could increase uncertainty and reduce investment into the UK. In addition, family businesses are watching cautiously to see what happens in respect of any changes to Business Property Relief, a crucial relief from Inheritance Tax, which could scupper succession plans and existing asset protection structures, such as UK trusts, typically used to hold shares in multi-generational family businesses.

Starmer’s administration is also expected to focus on public sector reforms, including tackling public sector pay issues, addressing bankrupt councils, and implementing measures to stabilise essential services like Thames Water. These steps, while challenging, are crucial for restoring public confidence and ensuring long-term economic stability.


The Conservative Party now faces a profound crisis following its historic defeat. With around 120 seats, the party is at its lowest point in over a century. The electoral loss is a clear indication of public discontent with their recent governance, which has been marked by perceptions of chaos and incompetence.

Several high-profile Tory figures, including Grant Shapps, Penny Mordaunt, and Lizz Truss, lost their seats, underscoring the scale of the political shift. This defeat has prompted calls within the party for introspection and a strategic overhaul. The Conservatives must decide whether to pivot towards unifying the right-wing vote by adopting some of Reform’s policies or to rebuild their centrist credentials to regain public trust.

The rise of Reform poses a significant challenge for the Tories, as Nigel Farage’s party has secured a foothold in Parliament and is poised to be a formidable opponent in future elections. This development could force the Conservatives to redefine their political strategy and policy priorities to remain relevant in the evolving political landscape.


The outcome of the UK General Election could mark the beginning of a new period of political and economic stability. For our investment team, the key takeaway is the opportunity presented by low valuations and a more predictable policy environment. While we remain vigilant about the potential for higher taxes and regulatory changes, the overall outlook is positive. Starmer’s government, with its focus on fiscal responsibility and business-friendly policies, provides a conducive backdrop for investment growth.

As we navigate this new investment landscape, our strategy will continue to focus on identifying undervalued opportunities and sectors poised to benefit from the new political regime. We encourage our clients to remain engaged with their investment plans and leverage our expertise to capitalise on the evolving market dynamics and wealth structuring risks and opportunities.