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Focus will now rapidly turn to how the new Labour government act during the first 100 days in office.
The Budget, likely in mid-September, will be of particular interest, with Starmer & Co having campaigned on a pledge not to raise income tax, national insurance, or VAT, despite significant spending plans, and only around £20bln of headroom against current fiscal rules.
Progress towards Labour’s mooted 2.5% annual GDP growth target, which seems punchy to say the least, will also be closely monitored, as failure to generate such growth in short order will likely necessitate further fiscal tightening.
Lastly, the Bank of England are now back ‘in play’, with the political landscape having stabilised, and the Old Lady’s self-imposed public speaking blackout set to come to an end.
So long as inflation continues to fall in line with the MPC’s forecasts, an August cut remains the base case, likely providing a welcome boost to consumer and business confidence at the start of Starmer’s premiership.
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