UK election: Battle for center ground heats up

The U.K.’s two main political parties are stepping on each other’s toes, as the most closely-fought election for decades continues to move markets.

Ed Miliband, the leader of the Labour Party, will launch its manifesto Monday with a pledge that Labour’s spending plans are “fully funded” and do not require any additional borrowing.

This marks an attempt to gain support on the traditional Conservative Party grounds of fiscal responsibility.

On the other hand, the Conservatives pledge to spend a further £8 billion ($ 11.6 billion) on the National Health Service (NHS) – which is generally seen as more of the Labour Party’s territory.

The latest polls suggest that either Labour or the Conservative Party will need to partner with at least two smaller parties to form a government.

This could be easier for Labour, with the left-leaning Scottish National Party on board.

Stock markets’ main worry about the risk from a Labour-led government is that it would reduce the speed of deficit reduction.

If the Conservatives get in, the party’s pledge for a referendum on the U.K.’s membership of the European Union and potential exit from the EU is the main concern.

The uncertainty has led markets on something of a bumpy ride, withsterling down over 6 percent against the dollar since the beginning of the year, although this has been exacerbated by a strengthening dollar.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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