Election Debrief: 5 July 2024

Written by James Appleby on 7th July 2024 | 7 minute read

Following weeks of intense campaigning, the electorate has delivered its verdict. As widely expected, the Labour Party has secured a historic landslide victory, soaring past the magic 326 seat mark in the early hours of Friday morning.

With the party now occupying over 400 seats, Sir Keir Starmer’s promise of “change” has certainly struck a chord with the electorate. In his victory speech, the incoming Prime Minister said, “We did it! You campaigned for it. You fought for it. You voted for it, and now it has arrived. Change begins now.”

The Conservatives sustained huge losses in the party’s worst-ever election performance. Outgoing Prime Minister Rishi Sunak said, “The British people have delivered a sobering verdict tonight, there is much to learn… and I take responsibility for the loss.” He continued, “Today, power will change hands peacefully and orderly, with goodwill on all sides. That is something that should give us all confidence in our country’s stability and future.”

Mr Sunak, who has been in office since October 2022, managed to hold on to his seat in Richmond and Northallerton in Yorkshire; meanwhile, a raft of senior Conservative MPs, including former Prime Minister Liz Truss, Defence Secretary Grant Shapps, Penny Mordaunt, and Jacob Rees-Mogg, lost their seats. In Wales, the Conservative Party lost all of its seats.

It was a record-breaking night for the Liberal Democrats, who secured over 70 seats. In early Friday morning, Sir Ed Davey said his party was set to achieve its “best result for a century.” Meanwhile, Reform UK leader Nigel Farage was voted an MP for the first time, and the Green Party broke records.

The Scottish National Party (SNP) suffered a dismal night, with SNP leader John Swinney describing the General Election result as “very, very difficult and damaging” for the party. The result greatly diminishes the chances of an independence referendum.

In the first July General Election since 1945, millions of voters went to polling stations on Thursday to have their say. However, early indications suggest an estimated voter turnout below 60% - the lowest in over 20 years.

Market reaction

In the run-up to the election, the markets were reasonably stable, with a strong Labour victory already priced in and investors hopeful of a pro-growth productivity-led agenda. As the markets opened following the results on 5 July, the FTSE 100 and FTSE 250 both opened up, and sterling held steady after the exit polls came in on Thursday evening.

What now?

A new parliament will be summoned to meet on 9 July. The King’s Speech is scheduled for 17 July and is part of the State Opening of Parliament, before which no substantive parliamentary business can usually occur. The new government will then decide a date on which the summer recess will commence.

And a Budget?

We await the date of incoming Chancellor Rachel Reeves’ first Budget, where we will gain clarity on the new government’s fiscal priorities, where any changes to tax and spending will be announced. Ms Reeves said Labour would not hold a Budget without an independent forecast by the Office for Budget Responsibility (OBR), and this requires ten weeks’ notice to prepare.

Labour manifesto key pledges

Some of the new government’s key manifesto pledges include reforming planning rules, recruiting 6,500 new teachers and tackling immigration. Plans are expected to be funded by raising £8bn through abolishing the non-dom tax status, increasing Stamp Duty for foreign buyers, clamping down on those underpaying tax by closing ‘loopholes’ in the windfall tax on oil and gas firms, and introducing VAT on private school fees (Rachel Reeves has suggested this won’t be imposed until at least 2025). No changes were promised to personal tax rates and pensions. The Triple Lock is expected to be upheld, and the pensions landscape will be reviewed.

The bottom line

Whichever way you voted on 4 July, the country has acted decisively to provide a massive majority, and under Keir Starmer’s leadership, the hard work begins. As usual, we will closely monitor developments likely to impact your finances over the coming months. Looking after your financial future remains a priority. Please get in touch if you have any questions.

The value of investments can go down and up, and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

All details are correct at the time of writing (5 July 2024)

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