UK Equities Climb to All-Time Highs as Sunak Faces General Election Wipeout

The sun is setting over 10 Downing Street

Broad measures of UK equity performance like the FTSE UK RIC Capped Net Tax Index have have posted record levels in the wake of local elections.1 The last on-the-ground test of political sentiment in the country before the general election only confirmed what polls have been predicting for a while now: Prime Minister Rishi Sunak’s Conservative Party is heading for a crushing defeat, some five years after winning a historic majority. When former Prime Minister Boris Johnson pushed through a snap election at the end of 2019, his promise to “get Brexit done” carried the Tories to the largest Conservative majority since Margaret Thatcher. Of course, a few COVID lockdown parties and poor staff choices later, “Bojo” was forced to step down and Liz Truss took over. Lasting just 50 days, her premiership was the second-shortest since 1721, the year that Sir Robert Walpole become the country’s first de-facto prime minister.2 While Rishi Sunak’s tenure has been free from major scandals, after 14 years of Tory rule, the country seems to be yearning for change.

The Labour Party maintains a huge lead in the polls of around 20 points, or 44%,3 leaving chances of another Tory majority unlikely. Given that the government has some flexibility in setting the general election, Sunak’s best bet could be to push the date back as far as possible—in this case, January 2025. This would allow more time for some of his key pledges to materialize, namely taming inflation, stopping illegal immigration across the English Channel and cutting National Health Service (NHS) waiting times.4

Ultimately, however, the prime minister appears to be left with no good options.

barely budging