UK election – what does it mean for investors?

The value of investments, and the income from them, can fall as well as rise and you might not get back what you put in. Past performance should not be taken as a guide to future performance. You should continue to hold cash for your short-term needs.

After Labour’s election win on Friday, the experts at Coutts Bank behind our investment offering give their opinion on what it means for markets.

The Labour party won a majority vote at the UK general election on Friday which doesn’t come as a surprise for stock markets.

Labour were favourites to win and investors widely expected Sir Keir Starmer to become Prime Minister.

There have therefore been no dramatic shifts in markets as a result of the news this morning (Friday, 5 July), largely because it was already priced-in.

UK government bonds have fallen very slightly but appear to have stayed calm, while sterling has remained steady against the US dollar. As for stock markets, the FTSE 250, which consists of domestic UK stocks, reacted positively and the FTSE 100 rose slightly.

Big changes ahead?

A lot of changes were mentioned by the Labour party in their manifesto ahead of the win, and people will be asking how quickly they will be put into action. In short, not very quickly at all.

A new Bill will have to be taken through the House of Commons and House of Lords before being given a green light. Also, organisations like the Office for Budget Responsibility will be keeping a close eye on how any policy change could impact UK finances.

What this means for your investments

The team at Coutts currently focuses on global stocks in its investments. So there should be little impact on the portfolios and funds they manage, including those behind Royal Bank Invest.

They invest in regions and sectors where they see good company performance, wherever that may be, and major US stock markets have reached record highs this year.

Fahad Kamal, Chief Investment Officer at Coutts, the team behind Royal Bank Invest and our other investment options, says: “Elections can cause temporary disruption and uncertainty, but eventually investors tend to get past that and get back to what really drives markets – things like company earnings, employment and economic growth.”