The 2024 General Election: What You Need To Know for Your Financial Plan
Whilst your attention may be on the upcoming General Election on 4 July, the UK is not alone in going to the polls. In total, there are set to be 73 national elections around the world, with more than 2 billion people set to vote in a record-breaking year for elections. Those countries holding votes in 2024 include India, Mexico, France, South Africa and the United States. With so many countries participating in the democratic process, there is the potential for an increase in geopolitical risk. However, global markets appear strong, with 2024 so far providing investors with positive returns.
For those that may remain cautious, it is worth noting that fund managers will have priced the various elections and their potential outcomes into their long-term view. Particularly in the UK, opinion polling suggests a change of power is the most likely outcome. Whilst change can sometimes demand vigilance, it is important to understand that change is fundamental to a well-functioning democracy. Holding a leader to account or removing a party from power allows ordinary citizens to influence their political leadership. When supported by opposition consent to the result, those outside the victorious party still retain the ability to scrutinise law-making and hold the Prime Minister accountable.
There are several reasons that investors should not be alarmed by change. Firstly, markets tend to support a clear victory for a party, providing public consent and the political power to pass laws. Unlike 2010, which returned a hung parliament, a Labour majority is thought to be the most likely outcome. A majority will likely provide political stability, and the outcome will also be priced into UK company valuations. Furthermore, under the leadership of Keir Starmer, Labour’s economic approach is considered more moderate. Their manifesto presents a far less transformative agenda than the previous leader, Jeremy Corbyn. Few changes to taxation are expected, which may be welcomed news to businesses, individuals and their families.
We remain positive about the potential for long-term economic growth. Investors should remember that time in the market is a superior predictor of financial returns compared to attempting to time the market. It is, therefore, beneficial to hold your nerve during economic uncertainty and consult the expertise of a financial planner should you have any worries.
It also remains important to hold regular contact with a financial planner. Change often brings to light a need to engage with your finances. However, consistency is key, with regular reviews helpful even through times of stability. For example, when tax allowances are frozen, the lack of change can also influence your economic position. The frozen personal allowance may mean you see less of any increase in your income. The freezing of the Inheritance Tax threshold could cause your estate value to creep over this threshold with inflation.
There are numerous reasons to regularly manage your finances, and our team of financial planners is here to provide peace of mind and help you plan for a better future. If you, your friends, family, or anyone else wishes to engage with us for a financial health check, please do get in touch.
This article was written by Callum Tindall, a Financial Planner at Castlegate, Loughborough branch.
