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What can investors expect from the General Election?

It has been a whirlwind week for British politics – and it’s not over yet. In our latest video, we look at the likely chain of events and reveal what we know about the election policies of the main political parties.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Read transcript

Emma: Hello I'm Emma Wall and I'm joined today by Tom McPhail Hargreaves Lansdown's Head of Policy to talk about Brexit. Hi Tom.

Tom: Hello Emma.

Emma: So it's only halfway through the week we're here on a Wednesday afternoon and already a lot has happened where are we?

Tom: Hasn't it and lots more to come. So we've really seen Boris Johnson lose because he's become Prime Minister, he's lost a vote in the House of Commons already, we've just had the Chancellor deliver his spending review statement, which all assumes that the government is going to continue with its plans for the year ahead there are lots of reasons why that might prove not to be the case and we're about to get the Rebel Alliance introducing their bill to try and stop Boris Johnson from being able to pursue a No-Deal Brexit. So we're really at crisis point right in the middle of it at the moment, everything's about to change, but that's where we're at right now.

Emma: And bookies and indeed a lot of market commentators are pretty much saying we can expect a general election before the end of the year. What's the time horizon that we might be able to see?

Tom: Actually never mind the end of the year, probably the end of the month. So the government has inherited a majority of one, it managed to get rid of that within the first day and now another minus 40. Pretty spectacular work. So this the government cannot endure, it cannot keep going and it's just a question of when and how the general election is precipitated. So just quickly, we're expecting the rebels to force through a bill that would stop Boris Johnson being able to pursue a No-Deal Brexit and having achieved that, probably by the end of this week, they would then support a move under the fixed term parliament act to introduce a general election, which we think would take place probably the week beginning Monday 14th of October, possibly the Tuesday.

So by the middle of next month we could be into general election territory that would then potentially resolve things one way or the other. Either the Conservatives come back with the greater majority, and they will then pursue Brexit come what may, or we get a Labour government. Or quite possibly some sort of messy coalition in the middle and then we'll just have to wait and see where we get to after that.

Emma: It's very difficult at the moment to predict, if any, what impact this will have on individuals, but one thing that we can look into and try and analyze are the policies of those two major parties. What do we already know that we might expect to see in the manifestos?

Tom: Right so let's quickly go through that. We've just had Sajid Javid talking about his spending review. Austerity Is Over. There is money everywhere, money for social care, money for schools, money for the police, for the NHS, money for the MOD… so the Conservatives are very much sending out a message there's money everywhere. They really want to slay the austerity word that has become quite toxic for them. We've heard nothing from them though about what their personal finance policies might be, about what their tax policies might be, how it would affect individual investors. So beyond that high-level stuff we're just going to have to wait and see what they will come up with next. They talked a bit about Social Care and then kicked that into the long grass.

We know a lot more about Labour's intentions they've been much clearer. Of course, the Labour leadership has been in place for much longer so we know for example higher taxation for people earning over £80,000, we know wealth taxes, we know higher corporation taxes, we know they're going to look to put the ownership of the country's infrastructure much more in the hands of the workers - so the inclusive ownership funds, where they take shares from big companies and hand them over to the workers, they put workers on boards, they're going to borrow a lot of money to invest in infrastructure. A really radical program. Now you know this is either horrifying or really exciting because it will fundamentally reshape the economy. It will become, you know, much more redistributive and much fairer, and it will be really radical. Now that's if a Labour government gets a majority. What we might see though is a coalition, so let's not just forget the Liberal Democrats who, in most scenarios, are likely to do quite well out of this general election, and therefore may have a stronger voice than they have had in the last couple of years. And they're kind of labour-like so yes, raising income and corporation taxes, a lot of focus on spending on schools, so much more the labour-end of the spectrum than the Conservatives. And we shouldn't forget the Liberal Democrats will be a moderating influence on whoever is in power if they don't get an overall majority.

Emma: I suppose the big question that is whether have another con lib or a lab lib.

Tom: And it looks unlikely that Jo Swinson would go into a coalition with the Conservatives more likely to go in coalition with Labour and act as a sort of moderating diluting effect on them fairly extreme policies that the Labour Party would like to introduce. But honestly you know, let's wait and see how and when the election gets triggered. That will be important - the context is important, who calls it, how, and when, and the narrative around there. We should get clarity on that within the next week or so, the timing of it, and then let's just see where we get to after that.

Emma: Watch this space.

Tom: Absolutely.

Emma: Tom thank you very much. This is Emma Wall thank you for watching.

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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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