ATTIVO
UK General Election Market Commentary
On the 22nd May, Rishi Sunak surprised the UK by announcing a general election to be held on the 4th July. As this date approaches, we understand that political events and the surrounding news cycles can cause concerns about the financial markets. Below, we have provided some key factual information to help provide some reassurance.
1. Global Diversification
The UK only makes up a small percentage of global portfolios. This is done specifically to reduce the impacts of individual political events, such as a UK election. Most of your investments are spread over a variety of different international markets, to mitigate the impact of events in any one location.
2. Market resilience and fundamentals
Markets historically are resilient to short-run political events and elections. Whilst we may see short-run fluctuations following election day, it is important to remember that markets are invested in the long run, and the equities and funds in your portfolio are selected for their fundamentals, rather than to take advantage of any short run changes.
The economy, along with businesses and markets, continues to operate regardless of the activities in Westminster. While an election does have an impact on the market, it is just one of many factors influencing its movements.
Sources: IG.com
3. Commitments to Fiscal Responsibility
Both the Conservatives and the Labour party have pledged that the UK’s National Debt should fall as a percentage of our GDP. This means that both parties, whoever gains a majority, will be limited to the amount of spending and borrowing they can make, and will mean markets will be unlikely to react strongly, whichever way the election goes.
Sources: Financial Times
As the date for the general election beckons, it’s natural to feel apprehensive about potential impacts on the financial markets.
However, it is important to remember that political events, while influential, are just one of many factors that affect market dynamics.
Your investments are globally diversified, which means they are spread across various international markets to mitigate the impact of political events in any one country, including the UK.
Regardless of which party wins the election, both the Conservatives and Labour have committed to reducing the UK’s National Debt as a percentage of GDP. This shared commitment to fiscal responsibility is likely to limit significant market reactions to the election outcome.
At Attivo, we are dedicated to guide you through these periods of uncertainty. Your financial goals and security remain our top priorities, and we are here to provide support and reassurance as the election date approaches. Contact us to speak with one of our financial planners.
Please remember: If you choose to invest the value of investments and any income derived from them can fall as well as rise and you may get back less than you put in.