With the election just around the corner, the polls are indicating a likely victory for Labour, though the size of their win remains in question. The most recent polls show Labour with a lead, but there has been some fluctuation in their support. The polls from YouGov and Ipsos Mori both show Labour in the lead, but there is a discrepancy in the numbers. The key question now is whether the support for Reform will collapse and potentially narrow Labour’s lead in the final days leading up to the election.
Surprisingly, the top three issues that are most important to UK voters are the economy, health, and immigration, with leaving the EU ranking lower on the list. This raises doubts about how well Reform will do in the election, especially considering recent defections from Reform to the Conservatives. While a Labour victory seems likely, the margins by which they will win are still uncertain, leaving room for potential shifts in the upcoming days. Some are expecting a record-breaking number of seats for Labour, but the final outcome remains to be seen.
On the economic front, voters seem confident in Labour’s ability to manage the economy, with research showing that Labour is more trusted than the Tories when it comes to handling the economy, business, and the stock market. However, voters trust the Conservatives more on taxation issues, with expectations that taxes will rise under a Labour government. The uncertainty extends to private pensions, where voters are divided on which party they trust more. Despite differing opinions on specific issues, the economy remains a key focus for voters in this election.
As the election approaches, UK asset markets have remained stable, with the FTSE 100 recording gains leading up to the election. This stability is in contrast to French stocks, which have experienced a sharp decline. The performance of UK asset markets can be partly attributed to political risk premiums being added to US and French debt, but not to UK debt. Despite the stable performance of the FTSE 100, individual stocks within the index have seen a narrowing breadth of gains, suggesting a trend that is not unique to the UK market.
The reasons behind the narrowing breadth of stock market gains in the UK are not directly linked to Labour’s expected victory in the election. Instead, global trends and investor preferences for US stocks over European stocks are influencing the market. The FTSE 100’s performance in the lead up to the election has not shown a clear direction, with factors such as potential interest rate cuts and global election risks playing a role. Overall, while Labour may be favored in certain aspects of the economy, the broader market trends are shaping the performance of UK asset markets leading up to the election.
