UK General Election: Stock market performs far better under Tories

The lines between the three major political parties in the UK may have become more blurred over recent years, with all three representing a center-left position rather than the distinction between the trade union and public sector-sponsored Labour Party and the corporate Conservatives of the 1970s, however it is still apparent that today’s softer government which is Conservative by name but not so much by nature, and liberal-left Labour party have still retained one traditional disparity.

This disparity is that, according to Bristol-based wealth management and investment company Hargreaves Lansdowne, stock market returns have averaged 16% a year under the Tories compared with just under 9% under Labour and just over 9% under the current Coalition.

These figures demonstrate that the watered-down Conservative party has maintained a similar effect on the markets as the Labour Party had done, as the current administration contains Conservatives and Liberal Democrats, the latter of whom are less geared toward business and more toward public sector initiatives which are funded by the taxation of large firms.

The figures, which were compiled by Hargreaves Lansdowne in an analysis for the Daily Mail are a further boost for David Cameron and George Osborne ahead of the general election on May 7.

A survey of FTSE 100 bosses this weekend showed 70 per cent believe a Labour government under Mr Miliband would be a ‘catastrophe’ for the economy. Mr. Miliband and his party have vowed to hit the high achievers hard should Labour win the election.

The analysis by Hargreaves Lansdown shows investors – including millions of workers saving for a pension – fare better under the Conservatives.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “The stock market has performed twice as well under a Conservative government as it has under Labour, according to performance statistics dating back to 1970.”

The analysis shows that companies have also performed better under the Tories with profits up by an average of 11% a year under the Conservatives and 6% under Labour. Writing in the Daily Mail, Mr Khalaf said: “Over the last 45 years there have been five Conservative governments, five Labour governments, and the current Coalition. “Over that time the UK stock market has returned on average 16 %  a year under Conservative rule, compared with 9% under Labour.”

George Buckley, UK economist at Deutsche Bank, said: ‘The 2015 UK general election is set to be the most unpredictable for nearly a century. “Polls suggest that neither of the two major parties may have sufficient support to secure an outright majority. There may be no good outcome for investors.”

A hard-hitting report by BlackRock, the largest fund manager in the world, said “a soothing outcome for the markets is hard to imagine” given Labour’s anti-business policies and Tory plans to hold a referendum on Britain’s membership of the European Union.

“Labour would be tough on business – and might be perceived as lacking fiscal responsibility,” the US giant said in the report. “A Conservatives-dominated Cabinet would pave the way for an unsettling referendum in 2017 on the UK’s EU membership. Whoever wins – and the result could take some time to emerge – will lead a weak government likely to pass only watered-down legislation.”

For those who remember the dark days of the 1970s in which the three day working week was implemented due to lack of ability to pay salaries by companies, large scale strikes which destroyed the entire manufacturing industry, educated, urbane professionals left the country en-masse for Canada and Australia, and refuse piled up on every street as local services failed, this report is likely to be of great interest.


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