Labour’s landslide election win shows few signs of unsettling London’s financial heartland after the party’s lengthy pro-business overtures, though many in finance remain wary they could be targeted to prop up Britain’s stretched public finances further down the line.
“The most important change is that there has been a big shift in mindset by Labour towards the City in the past few years,” William Wright, managing director of think-tank New Financial told Reuters. But there is also speculation about changes to how capital gains and wealth are taxed, as well as Reeves’ plans to change the way private equity is taxed, which could hit hard.
However, the risk of an increase in capital gains tax meant Labour’s victory was “slightly negative” for other listed financial companies such as Hargreaves Lansdown, Abrdn and Schroders.“The UK financial services sector can rest easy in the fact that radical change is unlikely to be on the horizon,” said Monique Melis, managing director at consultants Kroll.
France’s central bank said last year transactions between French-based financial services firms and the rest of the world hit a record €10.4-billion in 2022 – double the volume seen at the time of the 2016 Brexit vote. Many market participants just want to see financial sector reforms already agreed properly implemented under Labour, to protect the industry’s massive contribution to state coffers.
The Financial Conduct Authority is set to publish its listings revamp after the election, which could spur a flurry of corporate activity from end-July.