UK General Election Result: No Political or Market Surprises

UK General Election Result: No Political or Market Surprises 

The UK General Election results are in and, as expected, it’s a historic Labour landslide win, in line with pollsters’ predictions. After 14 years of Conservative rule, the UK is about to get a new government and a new Prime Minister in Sir Keir Starmer. 

The Results 

Votes were counted last night, and the final ones will be tallied though today. Early this morning (5 am GMT), Labour passed the 326-seat mark - meaning the party will have a commanding majority in the next parliament. 

As of writing, with a turnout of 59.9%, the Labour Party won 33.9% of the vote and 410 seats; the Conservatives came in second with 23.7% and 119 seats. The Liberal Democrats also saw their seats increase to 60, from just 19 won at the 2019 general election. Nigel Farage’s Reform UK won its first four seats and came second in many more constituencies, somewhat contributing to the Tories’ losses. 

The Way Forward 

Although there is still significant uncertainty as to how well Labour will do in government, we are already seeing a wave of cautious optimism springing in the UK, with analysts claiming the new government will be focused on financial stability - one of their campaign’s main selling points. 

Following Labour’s landslide victory, the FTSE 100 index rose +0.3% at the market open, whereas the yield on 10-year British government bonds (Gilts) dropped 3 basis points to 4.17%, largely in line with other European markets. Sterling (GBP) was up nearly +0.1% by 7:10 am GMT against the US dollar (USD) at $1.2777 and steady against the euro (EUR) at around £0.8475. 

Although uncertainty emerged following Sunak’s snap election announcement earlier in May, investors had been gradually turning more positive on the GBP in recent weeks, with the currency rising +0.4% against the USD and 0.5% against the EUR. In addition, Labour’s victory is seen as putting an end to relatively volatile market periods under the Tories, including the underperformance in GBP after the 2016 vote to leave the EU and Liz Truss’s disastrous ‘mini’ Budget in 2022, which triggered turmoil in the Gilts market.