Labour leader, Sir Keir Starmer and Rachel Reeves, shadow chancellor of the exchequer and former Bank of England official, who has said the new government would not raise three of the UK’s key taxes on wages and goods, and would “reset the relationship” with the EU. Photograph: GettyInvestors responded to Labour’s historic election victory by buying up UK stocks and pushing the pound to its longest winning streak in four years.
The hope is that Keir Starmer’s centre-left platform ushers in a new era of calmer and more moderate British politics, and that the new government is unlikely to see a return to the fiscal turmoil that upended bond markets in 2022. With Labour securing a decisive majority in the House of Commons, Rishi Sunak conceded defeat and Starmer is set to become prime minister.
“With political turmoil hitting other developed economies at the same time, this huge majority may present the UK to investors as somewhat of a political safe haven,” said Lindsay James, a strategist at Quilter Investors. The UK’s transformation in the mind of investors can be most clearly seen in the pound. The currency has been the best performer across the Group-of-10 this year, bolstered by higher interest rates and the prospect of a slow and shallow easing cycle from the Bank of England. A gauge of expected price swings on sterling over the coming month fell to 5.76 per cent this week, its lowest since May.