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MoneyWeek article- impact of different governments on the stockmarket

Journalist: Marc Shoffman, Freelance

ended 03. June 2024

Hi,

I am writing a piece for MoneyWeek this morning looking at the impact of different governments on the stock market,

I am keen for comments on how worried investors should be about a change of government?

Should investors shift their strategy depending on a Conservative/Labour government?

what difference does a government make to the stockmarket and financial planning?

Kind regards

Marc

4 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Ever since Cameron gave in to UKIP and offered an in/out referendum on Europe, the Tories have been dreadful for the UK economy. Uncertainty and instability have plagued every PM since, and there's been a few. The market will welcome in a new era of change, where a plan will be presented and a period of calm will descend. That is exactly what markets relish and the FTSE will see the benefit, all things being equal.
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Editor
Scott Gallacher
Director at Rowley Turton
Investor concerns about a government change are not surprising, but I suspect they are overblown. Starmer’s Labour isn't as alarming as Corbyn’s, and major tax hikes are unlikely in the current high-tax environment.

Conservative governments often coincide with better stock market performance, but this usually reflects broader economic conditions. Economic downturns typically lead to government changes, with the new government dealing with the aftermath.

A Labour win might weaken the pound, benefiting large UK firms with overseas earnings and investors with overseas investments and assets. Conversely, increased government spending could lead to higher interest rates and a stronger pound, aiding UK retailers and travel companies.

Given these mixed outcomes, a balanced portfolio with strong overseas exposure is prudent.
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Philip Dragoumis
Director and Owner at Thera Wealth Management
Research has shown that since 1955 UK equities have fared better under a Labour government and there has been no noticeable difference in GDP under Labour or the Conservatives. Of course, the usual caveats about past performance apply. However as UK equities make up less than 4% of global indices , the US election is arguably more important for UK investors. A stable government without constant infighting should be good news for the UK economy as is closer co-operation with the EU post brexit. Financial planning clients of course will want some clarity on the impact of Labour's tax plans such as VAT on school fees, and rumoured changes to pension allowances.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
History teaches us that the stock market does not care who is in power. The stock market will continue its long term upwards journey whether it is Conservative, Labour or anyone else in power. There will always be temporary declines, there will always be shocks. But we know this and therefore incorporate this into our financial planning. If you have the right investment strategy in place then you should not need to make make major changes in response the election result.