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May 8, 2015updated 04 Apr 2017 1:42pm

A favourable result for private banks: UK election 2015

The Conservative party have won the UK election, securing 331 of 650 available seats. After a number of policies proposed that would affect wealthy individuals by the Labour party, the private banking industry is exerting a sigh of relief

By John Schaffer

The Conservative party have won the UK election, securing 331 of 650 available seats. After a number of policies proposed that would affect wealthy individuals by the Labour party, the private banking industry is exerting a sigh of relief

Industry experts from private banks and wealth management companies give their comments on the surprise election result and the significance the newly elected government will have on the UK economy:

 

Bill O’Neill, head of the UK investment office at UBS Wealth Management

"The good news is that the current fiscal trajectory remains firmly in place. Importantly, the Bank of England will not be confronted by a change in the fiscal framework. This could prompt lower for longer interest rates."There could be clouds on the horizon for the UK economy if growth momentum is seen to have slowed, but broadly the economic context is relatively bright."

 

Gregor MacIntosh, CIO of Lombard Odier Absolute Return bonds

"David Cameron won’t have missed the fact that UKIP suffered a disappointing election in terms of seats won; and the fact that he will have to manage the divisive impact of a dominant SNP north of the border. This combination relieves some of the pressure on him to move ahead wholeheartedly with an early EU referendum.

"Already UK capital markets – sterling and equities – have recovered some of the uncertainty that was weighing on them in the run up to this difficult-to-call election. Sure, the outlook is favourable for UK equities and sterling but Europe and the wider world will make most of the difference in the months ahead."

 

Adam Chester, head of economic research and market strategy at Lloyds Bank Commercial Banking

"The lifting of the political fog has prompted a sharp reaction in the FX markets. Sterling has spiked higher against both the US dollar and the euro. Sterling rose sharply when the exit poll was published at 10pm last night, with GBP/USD rising to around 1.5450 and extending gains to above 1.55 as the results pointed to a clear Conservative victory. Government bond prices and the FTSE 100 have also opened higher. Within minutes of these markets opening, the FTSE 100 rose around 80 points to above 6,900, whilst 10 year government bond yields dropped over 10 basis points to 1.8%."

 

Colin Harte, senior portfolio manager and strategist at BNP Paribas

"The Conservative government has pledged to undertake a referendum on UK membership of the EU. However, with Prime Minister Cameron winning a majority in his own right, this should give him enough leverage to face down the more extreme euro-sceptics within his own party to conclude a sensible deal with the EU over the UK’s relation with it. But the very act of holding a referendum will cause some concern in financial markets over the next 12-18 months.

"The previous Conservative-led coalition government had planned a significant fiscal policy tightening following the election, which would have focused primarily on public expenditure cuts and increased user charges. With this policy largely endorsed at the ballot box, a Conservative government is likely to implement most of its planned fiscal tightening of 5.3% of GDP by 2019/20. Overall, this planned fiscal consolidation should temporarily dampen GDP growth and prevent a further significant deterioration in the UK current account position, which already stands at 5.5% of GDP."

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