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Election 2015: What will the next government mean for investors?

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
06/05/2015

As we await the results of the 2015 General Election, here are some suggestions as to what the result could mean for UK investors.

  • Conservative

If the Conservative party are to win the election, investors can expect to see certain sectors benefiting from the new government’s takeover. One sector likely to see a positive outcome from the win is the pharmaceuticals industry, where the Conservatives are committed to speeding up the drug approvals process. Despite the misgivings of some medical professionals, Conservative ministers have given their backing to new legislation proposed by Maurice Saatchi, former party chairman. This would give clinicians much more freedom to experiment with new treatments, which would in turn benefit both large pharmaceutical and smaller biotech companies.

Investors should note that banks will also be expected to do well under the Conservative government. They will be more likely to conduct business without being interfered with and criticised.

Keen investors may choose to look into investing in the aforementioned sectors, as well as keeping an eye out for other industries which will be positively affected by the new government.

  • Labour

There are some key areas that investors should keep an eye on if the Labour party are to come into government.

Although the party can be perceived as one that wants to redistribute wealth rather than create it, Labour has made some statements that may affect where we invest our money. Housing and infrastructure sectors are potential beneficiaries of the Labour victory. The party previously made a great deal of noise about the need for government to invest more in these areas, so investors should look to see whether they follow through on that.

Investors may want to consider buying shares in companies that are likely to be affected by the new government. If Miliband puts his money where his mouth is, we could see a real boost for companies with access to public sector contracts in these sectors.

  • Conservative/Lib Dem Coalition

It seems likely that the current coalition is in with a chance of another four years ahead of them. The Conservative and Lib Dem coalition is one preferred by the markets, due to investors generally feeling safer with continuity within the market.

The Conservative party’s part in the coalition is likely to benefit the pharmaceuticals industry. They are committed to speeding up the drug approvals process, and have given their backing to new legislation proposed by former party chairman, Maurice Saatchi. This would give clinicians much more freedom to experiment with new treatments, which would in turn benefit both large pharmaceutical and smaller biotech companies.

The Lib Dems have said that they will keep Britain on track by ‘adding a heart to a Conservative government’ and investors can expect to see this party supporting specific sectors within this. The Lib Dems are promising to create 200,000 new green jobs, which may benefit those investing in the renewable energy sector.

Investors may want to consider buying shares in companies that are likely to be affected by the new coalition government. If both parties come through on at least part of their promised policies, we could see a real boost for companies with access to public sector contracts in these sectors.

  • Labour/Lib Dem Coalition

Over a four year term of Labour-Liberal Democrat government, investors might expect to see some benefits to the key sectors that each party has highlighted in its manifesto.

As previously mentioned, the Labour party can be perceived as one that wants to redistribute wealth rather than create it. However, the party may affect where we invest our money. For example, Labour is interested in investing into housing and infrastructure sectors, and so keen investors should look to see what happens here.

Investors should also look to see whether the Lib Dems follow through on their promises. The party have promised to create 200,000 new green jobs, which would benefit the renewable energy sector, so current and potential investors in this area should keep an eye open.

  • Labour/SNP Coalition

Investors may be surprised by this perhaps least expected result; however a Labour-SNP coalition may eventually positively affect some sectors. Both parties’ manifestos had similar offerings, which included investments in new homes, the NHS and the minimum wage.

If Ed Miliband’s policy promises are to be kept, Labour can be expected to support housing and infrastructure sectors as part of the new coalition. The party have previously commented on the need for government to invest in these areas, so investors should keep an eye open to see whether they follow through on that.

Respectively, the SNP had promised to support the building of new homes, which may be good news to those invested in house builders. Investors should also note the party has previously voiced that protecting the oil and gas sector will be a priority for its elected MPs.

Keen investors may want to keep an eye on the aforementioned sectors, as they may be affected by the new government and in turn beneficiary to investment portfolios.


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