UK Election – Getting closer

UK Election – Getting closer
In just under one weeks the people of Britain will go the polls to cast their vote in the UK elections. When Theresa May called the Snap Election the polls suggested a landslide victory for the Conservative party but since then a lot has happened – the manifestos have been published, polls are suggesting that the lead over the Labour is shrinking, so everything is starting to shape up for the 8^th June election.

Latest poll（24 – 25 May）

Source: YouGov

It is predicted that the Conservative party should win this year’s UK elections however with a much smaller majority according to the current polls. This is mainly due to the recent publishing of their manifestos.
Now let’s look at the key policies of both frontrunners, the latest opinion polls and how the financial markets have reacted over the last few weeks.

Conservatives
♦ Real terms increase in NHS spending reaching £8bn extra per year by 2022/23
♦ Scrapping the triple-lock on the state pension after 2020, replacing it with a “double lock”, rising with earnings or inflation
♦ Means test winter fuel payments, taking away £300 from wealthier pensioners
♦ Raising cost of care threshold from £23,000 to £100,000 – but include value of home in calculation of assets for home care as well as residential care
♦ Scrap free school lunches for infants in England, but offer free breakfasts across the primary years
♦ Pump an extra £4bn into schools by 2022
♦ Net migration cut to below 100,000
♦ Increase the amount levied on firms employing non-EU migrant workers
♦ Scrap a planned £72,000 cap on care costs, which had been due in 2020
♦ People with assets of more than £100,000 would have to pay for their care – but could defer payment until after their death
♦ However, the value of an elderly person’s property will now be included in the means test for care in their own home, meaning more people will be liable to contribute to the cost of being looked after

Labour
♦ Scrap student tuition fees
♦ Nationalisation of England’s nine water companies.
♦ Re-introduce the 50p rate of tax on the highest earners (above £123,000)
♦ Income tax rate 45p on £80,000 and above
♦ More free childcare, expanding free provisions for two, three and four year olds
♦ Guarantee triple lock for pensioner incomes
♦ End to zero hours’ contracts
♦ Hire 10,000 new police officers, 3,000 new firefighters
♦ Moves to charge companies a levy on salaries above £330,000
♦ Deliver rail electrification “including in Wales and the South West”
♦ Bring the railways back into public ownership as franchises expire
♦ Regain control of energy supply networks through the alteration of operator license conditions, and transition to a publicly owned, decentralised energy system
♦ Replace water system with a network of regional publicly-owned water companies
♦ Reverse the privatisation of Royal Mail “at the earliest opportunity”
♦ Create at least one publicly-owned energy company in every region of the UK, with public control of the transmission and distribution grids.

The Pound

Since Theresa May’s announcement to hold a snap General Elections back in April we have seen the Pound strengthening against the US Dollar and reach its highest level since September 2016.
What effect will the election results have on the Pound?
Most likely that it will strengthen if Theresa May wins the elections as expected but it could go the other way if Labour win the election on the 8^th June. One thing is for sure – it is worth keeping up with the events leading up to the Election Day as we can expect movements in the Financial Markets.

Source: GO Markets MT4

FTSE100
In the previous article, we saw that FTSE100 suffered biggest one day percentage drop but since then the Index has not just recovered but more than recovered. On 16^th May 2017, it reached 7,500 mark for the first time in its 33-year history.

-By Klavs Valters
GO Markets