It's generally accepted that party manifestos usually tend to be a list of eye-catching pledges or wishlists than anything else, and while most people rarely read manifestos cover to cover, the pledges in them still need to be assessed in terms of any prospective impact on business and the economy, given the impact some of them might have if implemented in part or in full.
Conservatives pledge to ‘get Brexit done’
As far as the Conservative manifesto, ‘Get Brexit Done’ as it’s titled, is concerned, it’s a pretty bland affair, with the party anxious not to repeat its mistake of 2017, when the campaign foundered on the toxic subject of social care reform.
The manifesto has pledged to lock in place income tax, national insurance and VAT rates, while pledging extra cash for the NHS, childcare and education. It also pledges to introduce a points-based immigration system in the aftermath of pushing the withdrawal agreement through parliament by the end of January 2020.
The Conservatives have also said they would look at business rates – which have been criticised by struggling retailers – with a view to cutting them, particularly in the case of smaller pubs, shops and cinemas, in an attempt to rejuvenate the high street.
Constructions companies set to benefit
In terms of rail they have also proposed scrapping the franchising model which has come under fierce criticism from all sides of the political divide, while also pledging to build a new high speed line between Manchester and Leeds, along with funding a host of rail improvements across the Midlands.
All of these modest improvements to national infrastructure should see some significant wins for UK construction companies if they come to pass, with companies like Balfour Beatty, Costain and Kier Group likely to reap some of the benefits.
Still time for Labour to close the gap
With a high polling lead and the Labour party seemingly intent on spraying taxpayers money like confetti, it’s perhaps not surprising that the Conservatives are being more circumspect, but given the experience of 2017 there is still plenty of time for Labour to close the gap on the Conservative party. If they were to do so, the shake-up to the consensus could be quite considerable, even if the Conservatives still end up being the largest party.
Any change in electoral dynamics over the course of the next few weeks could significantly raise the risk that some of the radical measures in the Labour manifesto might well become a reality, which means that investors may head for the exits in the event of any sort of Labour government, minority or otherwise. Just comparing the spending plans of the various parties is an exercise in contrast, with the Conservatives pledging an extra £3bn of spending, while Labour has pledged an extra £83bn a year.
With this in mind, it’s also important to acknowledge that the bar to a Labour government may be a lower one than the general election polls would suggest, given that to become prime minister, Jeremy Corbyn wouldn’t necessarily have to win a majority. He could well be propped up by a combination of the SNP and Liberal Democrats, which might blunt some of the more radical edges of Labour’s policy framework. Even so, there would still be a cost in terms of another referendum on Scottish independence, as well as on Brexit.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.