City of London Is Relaxed About the Prospect of a Labour Election Win

(Bloomberg) -- In the City of London, executives are looking forward to the imminent general election as a chance for clarity after a turbulent few years.

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Matthew Beesley, Chief Executive Officer at Jupiter Fund Management Plc, said markets are not afraid of a possible Labour government when voters go to the polls on July 4 — unlike during the 2019 election, which the Conservatives comfortably won.

“While the devil is always in the detail, Labour has shown it’s willing to listen to UK Plc and they seem to understand what is needed to make the UK a more attractive place for investment,” he told Bloomberg News. “If anything, knowing that the election is happening reduces uncertainty and markets like that.”

Aviva Plc Chief Financial Officer Charlotte Jones said the insurance company was not concerned about the outcome, since the two main parties were aligned when it comes to important policies.

“Both parties want to invest in the UK and understand the importance of encouraging pensions to invest in the UK economy,” she said in a phone interview on Thursday. “We’re big infrastructure investors and both parties know that investing in UK infrastructure is important for health of the country.”

Donor Support

The City of London plays a role in any UK election campaign: as well as being home to much of the financial services industry that generates about 12% of GDP, its tycoons are often among the political parties’ biggest donors. Labour in particular has stepped up engagement with the finance industry since Keir Starmer became party leader four years ago.

Michael Spencer, the billionaire founder of broker-dealer ICAP, confirmed he would back the Conservatives and has made “a six figure donation” to the party that made him a Lord in 2020.

“I believe the government and the country has turned a corner under Rishi but we would go backward under a Labour government,” Spencer said in a statement.

Finance leaders are due to mingle with MPs at TheCityUK’s annual conference in London on June 27. But with the event just days before the election, Treasury committee chair Harriett Baldwin is among the politicians no longer expected to attend, according to a person familiar with the matter, who asked not to be named. Minister Bim Afolami and his shadow Tulip Siddiq have yet to confirm their attendance, the person said.

Economic Outlook

Toby Courtauld, who runs London office company Great Portland Estates Plc, said the key for commercial property markets will be a sense of confidence following a volatile period.

“I think so long as we’ve got a centrist government, most businesses will be more happy than if we have extreme governments,” he said in an interview. He added that Labour were already a familiar presence in local politics, where most planning decisions take place.

With both parties vowing changes to the planning system, Courtauld was keen to have clarity and consistency. “It’s a seriously difficult part of government to negotiate with and to navigate through. So I don’t think it could get much worse.”

Steven Fine, chief executive officer at Peel Hunt LLP, said the British economy is in a favorable position heading into the vote. “A new government will inherit a much better situation than most people assume. The economy is growing, inflation is coming down, pension funds are in surplus,” he said.

“Consider the interest in Hargreaves Lansdown, Great Portland and National Grid. The mood is better about the UK and its potential to turn itself around,” Fine said, referring to a flurry of corporate dealmaking and fundraising in recent days.

Dom Hallas, executive director of the Startup Coalition, conceded that the technology sector was unlikely to be a vote-winner, though its increasing need for talent, capital and regulation highlights how much the country has changed in the last 14 years of Conservative rule.

“The last time Labour were in a position like this in the polls, the tech startup ecosystem barely existed — now it’s a big part of the economic story both main parties will try to tell,” Hallas said.

Alasdair Haynes, chief executive officer of Aquis Exchange Ltd., said Labour had been engaging well with the City on issues such as innovation and competition, though the result of the vote remains uncertain. “It’s good for markets that we can start moving on — though we’ve still got the US election to worry about.”

--With assistance from Aisha S Gani and William Shaw.

(Updates with detail on conference attendees in ninth paragraph.)

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