Navigating the UK General Election

In a somewhat surprising announcement, current prime minister Rishi Sunak stood outside of 10 Downing Street in his soaked suit jacket as he declared a premature UK general election to take place on Thursday, 4 July.

Many political commentators had predicted the election to occur later in the autumn, but following a conversation with King Charles, the UK prime minister confirmed that parliament would dissolve on Thursday, 30 May.

The Office for National Statistics revealed that inflation, measured as CPI, had fallen to 2.3% in April—the lowest in close to three years—and it is understood that the prime minister consulted with his Chancellor, Jeremy Hunt, to arrive at the conclusion that better news may not come in time for the autumn. The Conservatives are sanguine that this recent positive news will provide a strong foundation from which they can convince voters of their leadership.

The Conservative leader reminded us of his role in the coronavirus pandemic whilst himself acting as Chancellor, leaning on the fact that the furlough scheme protected British jobs and businesses during the troubled period.

How does this affect me?

With the general election now confirmed and with recent inflation figures missing their 2.1% target, commentators believe it is unlikely that the Bank of England will cut interest rates during the summer months. Andrew Bailey, Governor of the Bank of England, has remained constant in his statement that inflation will need to fall to and stay around 2% before action is taken.

Both parties appear reluctant to raise taxes. Rachel Reeves, Shadow Chancellor, explained that Labour would not look to reverse the Conservatives’ recent 2% reduction in National Insurance.

Labour has claimed that they will not impose a ‘wealth tax’ and that capital gains tax rates will not be changed. With the capital gains tax annual exemption having halved twice over the current and previous tax years, there is little scope left to reduce this exemption any further.

Labour, still looking to raise taxes by other means, has flagged the possibility of introducing VAT and business rates to private schools, alongside the removal of the non-domicile status that some well-off non-UK nationals hold.

Contrary to some prior elections, including Johnson vs. Corbyn in 2019, both parties share policies that lean more towards the centre, albeit still from opposing sides, and show vastly smaller differences in their key policies than in previous campaigns.

As Labour has already warned, they plan to bring back the recently abolished lifetime allowance in some form, which would reintroduce a punitive tax charge for those who access large pension savings.

With Jeremy Hunt’s newly introduced ‘British ISA’, now more formally known as the ‘UK ISA’, still in the consultation period until 6 June, there is a possibility that the plan could be scrapped altogether by Labour in an attempt to simplify the ISA landscape. There continues to be a debate about the effectiveness and simplicity of the implementation of the new product.

There are murmurs that either party could look to review the timescales currently in place with regards to increasing the state pension age. With an ageing population, there are continued fears that the state’s cost of retirement will become unmanageable. This does, however, remain an extremely contentious issue, and no firm alterations have been discussed.

Regardless of the outcome, both parties have committed to continuing the state pension triple lock, which provides inflation protection in the form of the higher of inflation, earnings growth or 2.5%.


The Labour Party, headed by Kier Starmer, is approximately 20% ahead of the Conservatives in the opinion polls. Accordingly, the markets are already expecting a change of government, and, as markets are forward-looking, valuations have already priced in this scenario.

Whilst some volatility in the UK stock and bond markets during the weeks surrounding the election is normal, previous events have proven that this is often short-lived, especially when one party is a clear favourite.

As always, we are keeping developments under review and remain ready to act if the opinion polls change. In particular, a hung parliament could create uncertainty. We will review the manifestos closely for any surprises.

Please note that our view on the general election is based on our understanding of the proposed policies and available information; we cannot be held responsible for any errors, and you should not act on the basis of the information in this article, nor does it constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch via telephone at 01392 875500 or email at

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