As widely expected, Labour has won the UK election with a large majority. The new prime minister, Keir Starmer, will take office today. Market reaction has been muted but positive and Labour has repeatedly reassured the electorate and markets that taxation policy changes, in particular, will not be major. But while improving economic growth may provide some respite, questions around fiscal policy will remain. Supply-side reforms to the UK government are necessary and possible although fundamental changes to UK/EU relations are unlikely. 

 

Key takeaways:

  • Markets appear to have welcomed the clear Labour victory, hoping that it will result in a period of relative political and policy stability. 
  • Fiscal constraints are likely to remain a concern, despite a modest possible upturn in UK growth. Supply-side reforms are needed to drive major change.
  • Policy stability and cyclical growth will make UK assets worth another look. We outline equity sector preferences. Gilts and GBP look unlikely to spring major surprises. 

'

The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

PDF

Language:

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

This web page is not an offer to buy a security or enter into any transaction. The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.

Change of name: As part of Deutsche Bank’s Private Bank, the former International Private Bank also adopted this title on July 20, 2023.