Election 2019 – what the result means for investors

As the Conservative Party secures its biggest election win for 30 years, our Advisers look at the implications for investors going forward.

“Our job is to serve the people of this country, and to deliver on our priorities. And our priorities and their priorities are the same.” – Boris Johnson, 14th December 2019

Boris Johnson’s gamble on a Christmas general election has paid off, with his Conservative Party securing an emphatic victory on 12th December – their biggest election win in 30 years. Markets have rallied in response – but, with Brexit still to be resolved and Johnson yet to make good on his election promises, what does the result mean for investors going forward?

Brexit – the overriding factor?

Source: BBC1

The Conservatives secured a majority of almost 80 seats, with their ‘Get Brexit done’ campaign appearing to have united disenchanted voters from different parties.2 Their firm stance proved more popular than Labour’s pledge to ‘give the people the final say on Brexit’ and the Liberal Democrat’s ‘Stop Brexit’ campaign. 3,4

Labour leader Jeremy Corbyn confirmed he would not lead the party into another general election, commenting that:

“Brexit has so polarised and divided debate in this country, it has overridden so much of the normal political debate.”

Johnson has displayed a notably humble demeanour in his speeches since the victory, seemingly calling back to his time as the Mayor of London, when he was slightly closer to the centre of the party rather than the right. In his victory speech, the PM made it clear that he understands that some of the electorate didn’t necessarily vote for him – but for the Tories’ Brexit policy. He promised:

“Everything that we do, everything that I do as your Prime Minister, will be devoted to repaying that trust”.

According to the BBC, there was a 67% turnout for the election – which is interesting given that Brexit was the key issue (the UK referendum turnout was 72%).5 The significant majority means Johnson has a relatively free hand to push his deal through Parliament ahead of the Brexit deadline on 31st January 2020. At the time of writing (17th December), the government has just announced it will amend the withdrawal agreement to make it illegal for Parliament to extend the transition process beyond the end of next year.6

NHS pledge

As well as the Tories’ commitment to resolving Brexit, their pledge to support the health service by boosting NHS spending also proved extremely popular among voters. According to Sky News, Johnson is expected to use the first Queen’s Speech of the new parliament to underline his commitment to raising spending on the NHS by almost £34 billion by 2023-24.7 Indeed, if this pledge does become law, it will be the first time any government has made a legally binding spending commitment over several years, according to the Conservatives.

How have markets reacted?

A Conservative win was already priced in to markets, which soared in the immediate aftermath of the result:

  • The pound rocketed by 2.5% following Thursday’s exit polls, with sterling hitting a high just above $1.35.
  • On Friday, the FTSE 250 index of UK shares jumped 3.6%, with the FTSE 100 rising by 1.3%. The London stock market also soared by £33 billion.

The market reaction (the so-called Boris Bounce) shows that investors were anxious for certainty on the UK’s future. But despite these positive steps by markets, there are still uncertainties ahead and the markets’ initial exuberance might prove short-lived – even on Friday, the initial post-election jump soon reached a limit and tapered off a little. Investor attention will now turn to the next steps.

A global perspective

Looking beyond the UK, global markets appear to have other concerns, as Wellesley Senior Adviser Ian Howard notes:

“Interestingly, global markets are reacting more to Donald Trump’s tweets about trade deals than the UK election.”

The stock market hit record highs last week as the US President finalised a phase-one trade deal with China.

That said, the FTSE 100’s large weighting of foreign earnings usually push it in the opposite direction to the pound, so their joint rise hints at rising foreign inflows, meaning that foreign companies could find the UK an attractive place once again.

What does it mean for tax-planning and retirement?

According to the Tory manifesto, there is ample additional spending on the cards – which investors should take careful note of. Wellesley Adviser George Batchelor commented:

“The inevitable result of additional spending will likely mean changes to the tax system in the next Budget (and, most probably, higher tax on the way). Therefore, investors should look at getting their ongoing planning finalised before any changes take place.”

There are also pensions and retirement to consider, as Batchelor continues: “The size of this majority now allows for Boris and the cabinet to rely less on the far-right European Research Group, which will give them more flexibility when it comes to social issues.”

During the election campaign, the Tories pledged the following:

  • The state pension age will rise for men and women to reach 66 in October 2020 and 67 between 2026 and 2028. The state pension age looks set to rise again to age 68 between 2037 and 2039.
  • To maintain the triple lock – a policy that ensures the state pension rises in line with the highest of wages, inflation, or 2.5% each year. Critics have argued that maintaining the triple lock into the future will come at a significant cost, given the ageing population.
  • To address the taper problem’ in the NHS, an issue that has been causing many high-earning clinicians to turn down extra shifts for fear of high tax bills. However, experts say the government should simply scrap the taper altogether.
  • To conduct a “comprehensive review” of how to fix the issue of ‘net pay’ pension schemes. More than one million low earners are missing out on a tax relief top-up because of a quirk in the way their workplace pensions operate.8

One issue that wasn’t addressed in the manifesto is Women Against State Pension Inequality. The government has come under increasing pressure to compensate women who lost out as a result of rapid changes to their pension age, so it will be interesting to see if the Tories take action on this.

Looking towards a Conservative future

To conclude then, we now have a Conservative government – a majority government that should, therefore, be able to push forward with resolving Brexit. Johnson sealed his spot at Number 10 by pledging his ‘oven-ready Brexit’ and now the proof truly will be in the pudding!

As we have seen, investors have plenty to think about in the coming weeks and months. It is therefore important to retain a long-term plan with a diversified portfolio, to prepare for any eventuality – including Brexit, the next Budget and events overseas.


Ian Howard, Senior Adviser

George Batchelor, Adviser


1,5 BBC News, Election results 2019: Which party got the most votes… and other questions, 13 December 2019
2 Conservatives, Our Plan: Conservative Manifesto 2019
3 Labour, Manifesto: The Final Say on Brexit
4 Liberal Democrats, Plan
6 BBC News, Brexit bill to block further delay to transition, 17 December 2019
7 Sky News, Boris Johnson to enshrine £34bn NHS spending pledge into law, 15 December 2019
8 Office of Tax Simplification, October 2019

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