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Labour Landslide

Labour party secures victory in UK General Elections and a closer look at the results.

Labour Landslide

The Labour Party has secured victory in the UK General Election, with Sir Keir Starmer set to move into Downing Street later today with an expected majority of 170. Having commanded a swing of 11% since the Party suffered one of their worst performances in 2019, Starmer becomes only the fourth individual to lead Labour to victory at a General Election.

While the Labour Party has secured 410 seats at the time of writing, Starmer will nevertheless move into Downing Street with the lowest vote share of any majority government, at around 36%. Indeed, the history books will perhaps remember the 2024 General Election as the one which saw the electorate move away, in part, from the two main parties, with their combined vote share historically low. This comes as the Liberal Democrats look set to win their largest number of seats since 1923 at 71, while Reform and the Greens won 14.3% and 6.8% of the vote share, respectively.

In a fashion reminiscent of the market’s rejection of the Truss-Kwarteng mini-budget fiasco which brought sterling to its lowest level since decimalisation, the electorate rejected the Conservatives delivering the party its worst electoral performance in its history and seeing its vote share drop a gargantuan 20 points.

Having lost 248 seats at the time of writing (with 8 seats yet to be declared), the scale of Conservative losses, while not on an existential scale that some commentators predicted, far exceeds that of Balfor’s loss of 211 seats in 1906 and Churchill’s 1945 electoral defeat where the Wartime leader lost 187 seats.

With eight Cabinet Ministers losing their seat last night, the election also marked the highest number of defeats to any incumbent Cabinet in history. This included the Defence Secretary Grant Shapps who lost his seat after a 14.3% swing against him, and Penny Mordaunt – poised to be a potential runner in the forthcoming Conservative leadership race – failing to defend her seat following an 18.1% swing.

Other high-profile Conservatives to lose their seat include Alex Chalk, Gillian Keegan, Jacob Rees-Mogg and of course the UK’s shortest serving Prime Minister history, Liz Truss.

Following Labour’s landslide victory Sir Kier Starmer has said that “Change begins now” as attention turns to his forthcoming Downing Street address later today.

Power Pressure

When looking at the constituent countries of Britain, it is worth noting that the respective parties in power in England, Scotland, and Wales, all came under pressure.

At the time of writing (with 9 seats yet to be declared across the UK) the Conservatives lost 235 seats in England since the 2019 election. This came as the SNP had a crushing defeat in Scotland, losing 38 seats (with 53 of the 57 Scottish constituencies being declared). Amid political turmoil in Holyrood – which earlier this year reached a climax when Scotland’s First Minister Humza Yousaf abandoned the power sharing agreement with the Greens and ultimately had resign just 24 hours later – the SNP’s vote share fell 15.2 percentage points. (Like in 2019, the Scottish Greens took no seats in Westminster).

While Labour gained nine seats in Wales, their share of the votes (37%), also fell 3.9 percentage points from the 2019 election. This came as the Conservatives lost all 12 of their Welsh seats, against the Plaid Cymru who gained four seats and the Liberal Democrats who took one seat

Reform

For Reform, it perhaps was not a case of how many seats they won, but how many second places they took and where they took them. Not to say that four seats won wasn’t a great result for Nigel Farage, who only entered the race a couple of weeks ago, but in multiple red wall seats, Reform have unseated the Conservatives as the runner up and effectively become the local opposition to a large number of Labour seats.

Speaking this morning, Farage said that “there is a massive gap on the centre-right of British politics and my job is to fill it” and based on how many votes he’s got and also (saying this whilst cringing slightly) he’s probably going to be the only real personality in politics for a while, he can make a real dent in Westminster – particularly from within the Commons.

Markets Look Towards UK’s Fiscal Position

According to S&P Global, the UK’s fiscal position has been “the elephant in the room” over the course of the election given that the country’s Debt-to-GDP stands at 97.6%, its highest level since the early 1960s.

With Debt-to-GDP well above the averaged post-war average of 70%, one spokesperson at S&P said that “We are interested in the balance between revenue and expenditure adjustments, which will enable them (the new government) to improve the underlying fiscal position”.

This comes as the UK’s Debt-to-GDP is over double that of countries that S&P have a given an AA rating to.

As we looked at during the election, the Labour Party announced plans to raise an additional £8.6bn in annual taxes alongside reducing government spending by £1.5bn. Sir Kier Starmer also outlined his party’s intention to limit additional government borrowing to £3.5bn, in what he said would act as the catalyst of “national renewal”.

Attention now turns to how the future Government will address the precarious fiscal position the UK finds itself in.

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