A question I am increasingly being asked by clients is whether a change in Government has a significant effect on the financial markets.
The question is an interesting one given that next year will see a General Election in the UK and a US Presidential Election.
As things stand, the polls suggest that both Prime Minister Rishi Sunak and President Joe Biden will have a fight on their hands to retain power in their respective countries.
Intrigued by the question posed, I have looked back over almost 100 years of election results in the UK and US to see what the effect was on the FTSE and S&P market indexes.
The answer is that, while the results of elections can impact in other ways, depending on the politics of the successful party whether that be Conservative or Labour here or Republican or Democrat in the US, the historic effect on the financial markets has been virtually negligible.
In the UK, there is also a sense at the present time that were Labour to win a majority and form the next government, the change in terms of the overall approach to the stewardship of the economy would not be that noticeable. The message from Labour leader Sir Keir Starmer and Shadow Chancellor Rachel Reeves in their speeches at this week’s Labour conference in Liverpool was one of economic responsibility and a balanced approach.
It feels like, whether Labour or Conservative are successful at the next election, we are in a different place to where we were a year ago when Liz Truss was briefly in No 10 and a couple of years further back when Jeremy Corbyn was still leader of the Labour Party. Politics are back in the middle ground rather than overtly to the left or right.
Since our last newsletter, there has been little change in terms of the overall UK economic picture with minimal movement in the rate of inflation or interest rates.
The headlines this week have rightly been dominated by the renewed conflict between Israel and Hamas and our thoughts go out to all those affected by the violence, many of whom will have family in the UK.
The crisis has not so far affected the financial markets, although we will continue to monitor this as we do other geo-political events around the world.
As we move into next year, the hope is that we will continue to see a fall in inflation and the corresponding interest rates, which will be good for client portfolios after a challenging couple of years. Healthy global growth is a prerequisite for this to happen.
Our 25th Anniversary
As we mentioned in last month’s newsletter, we are looking forward to celebrating our 25th anniversary next month.
Once again, I’d like to reiterate our huge thanks to everyone who has made this milestone possible, whether our clients, staff or wider industry partners and connections.