UK Election Update

The UK Election continues to gather pace with TV debates, more opinion polls and the launch of party manifestos. The Conservative Party, Labour Party and Liberal Democratic Party have all emphasised that they will spend more and borrow more.  The key differences are in the magnitude of spending and tax policies. We’ll be following the estimates for government borrowing closely, as that can impact longer-term interest rates and inflation.

Opinion polls indicate that the Conservatives are extending their lead over Labour. The Liberal Democratic and Brexit Party appear to be losing momentum. Bookmakers are currently pricing in an outright Tory majority, with the next most likely outcome a hung parliament.  We note that opinion polls continue to show around 15% of undecided voters, which could be an important factor come election day.

Markets are not pricing in the risk of a Labour-led government at present. If this occurs, it could lead to heightened volatility in UK asset values. A Labour majority could mean the UK has a closer relationship with the EU. However, it would also bring a dramatically different economic model.

Earlier in the year, we added exposure to the pound and domestically-focused UK companies to client portfolios. We maintain this positioning going into the election although we acknowledge they could be sensitive to the election outcome and hence may require revisiting post the election results. We will update you as and when our opinion evolves.


What can we learn from the manifestos? 

Do the manifestos matter to voters? They provide a summary of policies, and which allows for cost assessments and comparisons. Leadership and values may sway voters more than policies, though.

Do the manifestos matter for investors? We don’t expect the manifestos to have an impact on markets. But, they do give us more information about how each party might behave if put in power. That can help us understand how markets might react on 13 December.

From an investor’s point of view, specific policies could mean big changes for sectors and individuals. Here’s what caught our eye in the Conservative, Labour and Liberal Democratic Party manifestos:


Conservative Party Manifesto


Labour Party Manifesto


Liberal Democrats Party Manifesto

If you would like to discuss this article further please contact your usual Brown Shipley Adviser.

Shanti Kelemen // Investment Director

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