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  • Writer's pictureDavid Bojan

Labour Wins the 2024 UK General Election - What This Means for Your Money

Updated: Jul 6

Labour has won the 2024 UK General Election and Sir Keir Starmer has been appointed Prime Minister.

Labour won with a significant majority (gaining over 400 seats), but with only an estimated

35% of the vote, the lowest share for a governing party in history. That will leave MPs

worrying about the safety of their seats at the next election, as difficult decisions are taken in office.

Sir Keir Starmer will of course appoint his cabinet, with Rachel Reeves chosen as the first female chancellor of the exchequer. She has set firm fiscal rules that day-to-day costs are met by revenues and debt must be falling as a share of the economy by the fifth year of the forecast.

A budget isn’t expected until autumn. However, planned revenue raisers like VAT on private school fees and an increase of the windfall tax on oil and gas extraction are expected on the agenda in her first fiscal event.

Houses of Parliment and Big Ben

Driving forward Labour’s five missions will be top of the to-do list:

  1. Kickstart economic growth

  2. Make Britain a clean energy superpower

  3. Take back our streets

  4. Break down barriers to opportunity

  5. Build an NHS fit for the future

The chancellor will also be responsible for creating the conditions for productivity rises and

growth in line with the ambition for the UK to secure the highest growth in the G7.

What the New Labour Government Could Mean for Your Money

Labour has vowed to make big changes to the UK economy, but given poll forecasts, the

result has caused few ripples on financial markets.

The UK stock market lifted a little immediately following Labour’s victory. The pound was largely unchanged against the US Dollar, as the exit polls came in and lifted only very slightly as the overall result became clear, hovering around $1.277. The lack of movement was unsurprising given the overall result had already been priced in.

The government’s priority will be keeping the Bond markets calm in the aftermath of the

election and not overdoing spending pledges. However, there could be some tinkering with

the borrowing rules at some point in the future, to distinguish between day-to-day spending and investment, to propel long-term growth.

This could potentially loosen the purse further ahead. So far, this doesn’t seem to have perturbed the debt markets, with bond investors appearing to be more sensitive to interest rate speculation than the investment plans of an incoming government.

This result comes on the heels of a steady rise for the UK market, retaking its crown as

Europe’s most valuable for the first time in nearly two years last month. With political turmoil in France now taking centre stage, the UK looks finally set to enter into a period of financial stability. This has the potential to spark renewed investor interest in the UK.

London Bridge and the River Thames at night

Labour made some expensive commitments during the campaign, including sticking with the pensions triple lock and ruling out rises in income tax, National Insurance or VAT. However, money will be tight, so there’s still a chance of cuts in services or tax rises later.

Much of the election chat was about tax hikes Labour didn’t rule out, including capital gains tax and pension tax relief. However, we don’t need to speculate to spot some of the looming hikes.

There was a pledge to increase taxes for specific groups of people – including non-doms and independent schools faced with the prospect of passing on the expected newly imposed VAT on school fees to parents. There was also silence on frozen income tax thresholds, which will mean even more people paying extra tax.

Beyond taxation, there were pledges of support during life’s expensive periods – including older age and parenthood. And for those struggling to buy a home, there were plans to help make buying property more affordable.

Meanwhile, for those wrestling with everyday costs, there were promises of everything from

improving the minimum wage to cutting utility standing charges. However, it’s likely we won’t see these changes come in until the expected autumn budget.

Important information - This article isn’t personal advice. If you’re not sure whether an

investment is right for you please seek advice.

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