The UK will head to the polls on Thursday 4 July to vote for its next government, with Labour currently holding a comfortable lead in the polls.
A victor for Labour would likely mean increased taxes for the wealthy and companies, restrictions on ISAs and pensions, and more importance on public provisions, according to Stephen Yiu, chief investment officer of Blue Whale Capital.
“The UK is experiencing an increasingly unsteady political backdrop. Sadly, neither of the main parties are offering much in the way of vision for the UK, and voters are forced to either stick with a party with a track record of disappointing or appoint a new administration, in perhaps the misguided hope things will change for the better,” Yiu said.
“There is certainly nothing from either manifesto that would suggest either hold solutions to get the country‘s economy back on an even keel.”
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Yiu noted that while this week’s election is a prominent discussion within the UK, it will likely have little effect on broader markets. The market cap of companies such as Microsoft and Nvidia currently overshadow the FTSE 100 as a whole.
“While the UK is an important market for many of these large global companies, their business models mean that even in times of great economic and political uncertainty, their products remain in stubbornly high demand due to their importance in everyday life – be that work, leisure or a combination of both,” Yiu said.
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While UK companies may not see large shockwaves, Yiu did point to currency as a potential area of concern if the value of the pound suffers. Blue Whale currently has less than 5% of its holdings in sterling-denominated shares.
“Consider the main risk to your investment as permanent loss of capital,” Yiu said.
“Short-term volatility around an election is uncomfortable, but good businesses, backed with strong fundamentals should prevail over the longer term.”
