| While many Americans spent the Fourth of July fretting over the state of the US presidential race, voters in the UK were casting their ballots. As Katherine Griffiths writes from London, the Labour Party's win was largely expected, and the financial sector seems content. If this email was forwarded to you, click here to sign up. It was raining six weeks ago when Rishi Sunak called the UK's general election and raining again Friday when Keir Starmer claimed a landslide victory for the Labour Party. Just as British people assigned symbolism to Sunak getting drenched as he made the announcement outside 10 Downing Street in May, the downpour that accompanied Labour's win was—for those inclined to see it—more of a cleansing, a national renewal after 14 years of Conservative rule. The mood in the City, meanwhile, was sunny to partly cloudy as UK markets showed scant reaction to Labour's resurgence. The outcome had been priced in for weeks, and the UK is largely seen as a haven, with investors far more concerned about what's happening across the Channel and across the Atlantic.  Keir Starmer and his wife, Victoria, outside 10 Downing Street in London on Friday. Photographer: Chris J. Ratcliffe/Bloomberg The business and finance sectors have been getting comfortable with Labour for more than a year, as Starmer and Rachel Reeves, the new chancellor of the Exchequer (Britain's equivalent of the Treasury Department), have repeatedly insisted they'll make a clean break from the policies of Labour's previous leader, Jeremy Corbyn, who'd proposed sweeping nationalizations of industry. UK General Election Results 2024 — Live Updates But if the City's collective reaction was a sigh of relief after years of turmoil in British politics following the 2016 Brexit vote, there are also big hopes that the new government will take bold action to fulfill its central pledge to goose economic growth. The size of Labour's victory is a mandate on the scale of the party's victory after the Second World War, according to Nigel Wilson, former boss of Financial Times Stock Exchange 100 insurer Legal & General—who is likely to have a role helping Starmer's team. "This could be 1945, a transformation of the economy," Wilson told a Bloomberg gathering of politicians and financiers on Friday. The UK's public finances are under strain, but there is a wall of money in pension funds and other savings that could be pumped into infrastructure projects if the government creates the right conditions, he said. "We could do over £100 billion of investment per year for the next 10 years, just with private-sector money," Wilson said, creating economic growth that would solve the country's constrained public finances. That doesn't mean the switch to Labour won't entail tightening some (rather expansive) belts in the City. The party has said it will scrap preferential tax treatment on overseas income and earnings for wealthy foreigners living in Britain (that once included Sunak's wife, Akshata Murty, but she has since agreed to cough up the cash). And it wants to boost the lower tax rate that private equity tycoons pay on income from investments. Some in the City fret that Starmer has various wealth taxes up his sleeve to help cover the costs of upgrades for Britain's creaking schools and hospitals, and they say Labour's plans to boost workers' rights risk constraining flexibility to hire and fire. Somewhat raining on Starmer's parade was the rise of the Reform UK party led by pro-Brexit populist Nigel Farage. With four seats in Parliament, Farage will be in a position to stoke opposition to Starmer's plans to move closer to Europe. And a near-record low voter turnout reflects a weariness with politics that the Labour leader failed to turn around during his campaign. But concerns about Starmer's ability to rise to the challenges ahead were for another day. The rain had cleared before he spoke outside 10 Downing around lunchtime on Friday, with investors and a big chunk of the British population prepared to give Labour a chance. | 
No comments:
Post a Comment