What Does the UK Election Mean for Markets, Business and Economy: Q&A

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In a live Q&A on the Markets Today blog, we asked experts from across the newsroom for their analysis of the July 4 UK election.

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Meanwhile, there are specific sectors to keep an eye on. Housebuilders are seen benefiting from Labour’s pledge to encourage new building approvals, while shares of some of the UK’s smaller energy firms dropped after Labour’s manifesto revealed plans for a £1.2 billion windfall tax on the sector and a vow not to issue new North Sea oil licences.”“The benchmark FTSE 100 has gained some 7% this year, but even so, the basket is considerably undervalued.

Labour insist they don’t see tax hikes as the answer, but privately some aides admit some small rises are likely at the very least. That could mean a focus on wealth - possibly capital gains tax - pensions and businesses. If the growth miracle Labour is praying for doesn’t arrive, more tax rises may be the only way of plugging the spending gap.

The scope of VAT could also be widened by getting rid of many more exemptions, not just private schooling. This could in fact be a good thing, as it would represent a tax simplification but it might be politically difficult . Keir Starmer put “wealth creation” at the heart of Labour’s manifesto, prioritising boosting investment and working with businesses to unlock economic growth. But if there’s a fiscal black hole and Labour need revenue-raisers, it’s not impossible they will have to look at things like making employers’ pension contributions liable to employer NICs payments. That would yield some £8.5 billion, according to Bloomberg Economics, but would risk upsetting businesses.

What about utilities? Should we expect to see changes to regulation or water companies like Thames Water taken into public ownership under a Labour government?“A major concern in the UK utility sector is Thames Water, the company that provides water to millions of people in and around London. The company is running down a £2.

Nonetheless, Starmer’s pledge to tackle the supply side has improved sentiment among housebuilders, and is one factor behind the sector’s string of mergers and proposed deals of late. There is also some hope that Labour, if they come to power, might mimic the Conservatives’ demand-side policies such as Help to Buy.

The Tories are raising the stamp duty threshold for first time buyers and providing equity loans of up to 20% of the value of the property under Help to Buy to tackle the same problem of mortgage access.”Bloomberg’s City Editor Katherine Griffiths says: We’ve had a couple of questions through on the implications for M&A activity in the UK, should the polls prove true and Labour win the election.“There’s been a sharp rise in M&A interest in UK stocks in the past year or two. That’s been down to a combination of the very cheap valuations the UK stocks trade at compared to indexes in Europe and the US, and a view among potential buyers that this is disconnected from the fundamental value of those businesses.

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