British Prime Minister Rishi Sunak makes a statement in the rain outside 10 Downing Street, announcing that the UK’s July 4th general election will take place on May 22, 2024 in London, United Kingdom.
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British Prime Minister Rishi Sunak ended months of speculation this week by announcing a national election on July 4, as forecasts suggest his right-wing Conservative Party is likely to be toppled after 14 years in power.
News of the vote came as a surprise to the public, the media and much of Sunak’s own party. It had been expected to take place in the autumn, ahead of the January 28, 2025 deadline, giving the Conservatives more time to reverse weak poll numbers that have seen them trail the centre-left Labor for more than two years. party remained behind.
Speaking in a rain-soaked press conference outside 10 Downing Street on Wednesday, Sunak said: “Uncertain times require a clear plan and bold action.”
He stressed that recent economic data formed an important part of his decision-making, telling the BBC’s Today program on Thursday that inflation had “returned to normal”, the economy was growing and wages had “sustainably increased”. .
Price increases in the UK moderated from a peak of 11.1% in October 2022 to 2.3% in April 2024, figures released on Wednesday showed, after the politically independent Bank of England raised interest rates 14 times in a row .
The UK economy fell into a shallow recession in the second half of last year before posting growth of 0.6% in the first quarter of 2024.
“I think it’s clear that while there is a lot of work to do and people are just starting to feel the benefits, we have turned the corner and restored economic stability,” Sunak said.
‘It couldn’t be better’
Bronwen Maddox, director of the Chatham House think tank, said the election date shocked many conservatives who thought it would take place closer to the US election in November.
“I have to conclude from this [Sunak] thinks this is the best thing ever…you can hear signs that the economy is doing better, house prices are going up, people are less worried about energy bills, but I’m surprised that he which has no longer been given time to penetrate. ” Maddox told CNBC by phone.
While Wednesday’s inflation figures showed a sharp fall in the overall rate to close to the Bank of England’s 2 percent target, they were higher than many economists had expected.
As a result, market bets on a summer rate cut declined and it now looks unlikely that the central bank will cut rates on June 20, its final meeting before the election.
Labor is now expected to focus entirely on denouncing the Conservatives’ 14-year legacy and on its own ability to maintain fiscal discipline, Maddox said, while its policy agenda is relatively light on detail.
She will also try to sidestep talks about the UK’s post-Brexit relations with Europe, migration, the war in Gaza and the current government’s controversial plan to send asylum seekers to Rwanda, she added – all topics under discussion were extremely controversial among members.
Shadow Chancellor Rachel Reeves, Labor leader Sir Keir Starmer and deputy leader Angela Rayner attend an event to launch Labor’s election promises at the Backstage Center in Purfleet, Britain, on May 16, 2024.
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Figures released on Thursday showed net migration to Britain fell 10% in 2023 from a record high, in what Home Secretary James Cleverly touted as a victory for the government.
“Whatever happens, it will definitely be a historic election,” Hannah Bunting, a lecturer in quantitative British politics at the University of Exeter and co-director of the polling center, told CNBC’s “Squawk Box Europe” on Thursday.
Labor would need a 12.7% increase in the national vote to win a parliamentary majority of just two – more than Tony Blair, who ousted John Major on a wave of popularity in 1997, she said.
“I think it will be an election that we will be talking about for quite some time, whether because Labor wins in a landslide or because the Conservatives are wiped out, as some commentators expect,” Bunting said.
“I’m not 100% convinced of that yet because we’ve had local elections recently… and although the Conservatives did very poorly there, the real winners there were smaller parties and independents rather than Labour. If that also leads to a general election, this Labor landslide seems a lot less certain.”
Market reaction
While the election news rattled the political establishment, it did not have much of an impact on markets.
Adrien Pichoud, chief economist at Bank Syz, said it had been clear to investors for some time that there would be a change of government this year and the actual timing of the vote was of limited significance.
British stocks traded slightly lower on Thursday, bucking a broader trend, although this was also due to Wednesday’s inflation data and changing interest rate expectations.
The British pound’s reaction was also muted, rising slightly against the US dollar and falling against the euro.
“Unlike some times in the past, a Labor government this time is not seen as a risk scenario; in fact, investors seem to be on board with the idea,” said Roman Ziruk, senior market analyst at global financial services firm Ebury Email.
“This is partly due to the party’s shift towards the political center since the last election,” Ziruk added.
“Investors want stability and we are now at a stage where a Labor majority, while heavily priced in, would likely be perceived by them as mildly positive for the pound, even if only by avoiding a dreaded stalemate in Parliament. “
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2024-05-23 13:13:01
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