Labour wins UK general election - 5th July 2024

The Labour Party has won the 2024 general election. Sir Keir Starmer, our new prime minister, has positioned his party as one that is able to drive economic growth.

Despite being heralded as a landslide victory, in reality labour’s share of the vote isn’t that colossal with 35% percent of the votes and the opposition spread across three other main parties, for the Conservatives with a 24% share of the vote, it is the first time in the modern era that they have fallen below 30%

There will be no mini-budget and no date has been set yet for the first Labour Budget but it is unlikely to be before September 13th - this is because Labour has committed to including a forecast from the OBR which requires 10 weeks notice.

Macroeconomic analysis company Capital Economics, believe that Labour is set to ‘benefit from a combination of lower inflation, lower interest rates and faster economic growth than most are expecting’. It forecasts inflation to drop to around 1.5% by the end of this year, ‘prompting the Bank of England to cut interest rates from 5.25% to 3% next year, rather than to 4% as investors expect’.

As we write this, the financial markets seem so far immune to the election (as expected) and the pound is relatively stable. The focus continues to be on interest rates.

Over the coming months we expect the main impacts on personal wealth to be based on changes to capital gains tax, inheritance tax and pensions. Private schools are working on how they can minimise passing on the full tax changes (VAT and business rates) to parents. We envisage changes to be announced in October, to start being implemented in April 2025.