Hi Friend, It's a Labour Landslide ... with just 34% of the vote ...
John Authers, senior editor for markets at Bloomberg summed it up,
"I wouldn't vote for Labour, one of my favorite contacts in the City told me this week, but they aren't going to mess things up."
This is the attitude permeating the UK's financial community. The mood for months has been the Conservatives deserved to lose power. It doesn't matter much, if Labour do win. They could hardly do much worse than the Tories
Now the voters have spoken, taking the same attitude as the City perhaps. Casting ballots tactically, against the Tories. Labour's share of the vote didn't rise much but ...
In the final count, Labour gained 211 seats, leading with 412 seats overall. The Conservatives lost 250 seats, entering the House next week, with just 120 seats. Lib Dems the big gainers with 63 new MPs and 71 seats in the lower chamber. Reform the big no show with just four seats at close of play.
It must have been Ed Davey's bungee jumping which tipped the poll for the Lib Dems. Perhaps Nigel Farage, should have been at the end of a bungee rope. Many would have voted for that.
In terms of share of votes, Labour scored 34%, Tories 24%, Reform 14% and the Lib Dems 12%. Interesting to note the combined Tory-Reform share was 38%, a four point lead over Labour. Lib Dems lower share of the vote, yielding many more seats that Reform. No wonder Reform advocate a first past the pub system.
For the Tories, it was the end of an era. Many big names lost in the battle. Liz Truss, Jacob Rees-Mogg, Penny Mordaunt, Grant Shapps (Defence Secretary), Gillian Keegan, (Education Secretary) and Lucy Frazer (Culture Secretary.
Jeremy Hunt clung on to his Surrey seat. The ex Chancellor, MP for South West Surrey since 2005, won the newly created seat of Godalming and Ash by around 1,000 votes after stiff competition from the Liberal Democrat candidate.
Will he be the next leader of the Tory Party? Rishi Sunak has announced he will step down, once formal arrangements are in place to elect his successor. Sunak held 48% of the vote in the constituency of Richmond and Northallerton in Northern England. A staunch Tory seat, "they would elect a goat, if it had a blue rosette around its neck", it is said.
For the Tories and the electorate, it has all been too much. Since 2016 there have been five prime ministers, seven chancellors, seven foreign secretaries, seven home secretaries, eight industry ministers and nine education secretaries.
In 2022 alone, the country experienced three prime ministers, four chancellors of the exchequer, three home secretaries, three health secretaries, three industry ministers and five education secretaries.
Since the implosion of the gilts market in 2022, it has been taken as inevitable the Conservatives would lose out in the election. The terrifying episode of rising rates, would ensure Labour would not attempt a big expansion of tax and spending plans in a dash for growth.
Labour will take over, accepting the bond market won't let them do anything too expansionary or ambitious. Whatever Labour does next, it will be within the parameters set by the gilts market. That's why the City is so relaxed.
So How Did The Markets React ?
UK stock markets moved higher following news of Labour's election victory. House builders the biggest winners. Traders bet the new government's proposals to free up the planning system would allow developers to build more homes. Excitement curtailed, the FTSE closed at just under 8,200, down from the peak of 8,269 intra day.
Ten year gilt yields closed at 4.13% drifting slightly over the day. Sterling closed up against the Dollar at $1.28 and up against the Euro at 1.08.
The limited reaction in currency and bond markets reflected the fact the election result has been a foregone conclusion for a long time now. Starmer and Reeves have made it pretty clear they would play safe for now.
The new Prime Minister stated in his speech. "Our work is urgent .. We begin it today". A lot to be done, we wish them well ... But The Bond Vigilantes Are Watching ...
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