In the run-up to the UK’s latest general election, London’s economy reacted to the announcement of a snap election and ongoing campaigning in different ways. Many even believed that it was the UK’s gloomy economic outlook that made Prime Minister Theresa May decide to call one in the first place, despite previously claiming otherwise. Either way, the capital city’s economy experienced impacts from the election run up.
High Street Slump
The London high street is home to many world-famous shops and brands, providing a strong boost to the city’s economy from both citizens and tourists alike. A slump on the high street after the announcement of another general election was made had the biggest impact on economic growth for 2017 so far. Output from the distribution, hotels and restaurants sector (which includes the retail industry) fell by 0.5%, which was the largest fall in a quarter since 2010. The drop in retail sales and slowdown of the services sector could have been a knock-on effect due to the uncertainty surrounding the economic future that depended on the election result.
Financial Services in The City
Businesses and financial services in London have experienced a lot of change and volatility in the markets across the past few years. Many are learning to cope with such uncertainty, but with Brexit and an election going on at the same time, there was a lot to prepare for. Many financial businesses may have been planning for leaving the EU, but the election threw a lot of those preparations into doubt or affected their business in other ways should policies and the strategy around Brexit change; especially with a decision over a potential coalition.
For traders and investors in London, the election presented many opportunities and challenges. While some companies saw their stock rise, others fell, leading to plenty of buying and selling opportunities for online traders. Forex traders especially will have experienced a lot of trading opportunities, as currencies always remain volatile during an election. The pound fell and rose again as polls have changed over the past few weeks, with it reaching its lowest levels since the election was called, following the exit polls and eventual result.
For the British and especially London’s economy, continuing rising inflation is another issue. Ever since the Brexit vote in June 2016 that saw the pound fall to record lows, inflation has continued to climb. This has had a knock-on effect for consumer spending in the city, partly to blame for reduced high street action and slower economic growth than first predicted. Combined with ongoing Brexit negotiations, it remains unclear how far inflation will keep rising in the wake of the General Election decision.
Elections have always had a big effect on the economy of a country and its capital city with the 2017 general election in the UK was no different. Now, with the impending decision to be made regarding the Conservatives and DUPs potential coalition, London’s economy has never looked more uncertain.