Finance Explained

The press loves tying a statistic to a celebrity to encourage their articles to be read, so it was not surprising to see the 'Taylor Swift effect' be described as a factor for keeping inflation over 2% in the UK. The reason given is her massive global tour and its arrival on UK shores which in theory pushed up hotel prices as fans converged en masse on the cities hosting her concerts.  The 2% figure for May to June 2024 comes from the Office of National Statistics and it is claimed is likely to prevent an interest rate cut. Zeroing in on the 'Taylor Swift effect', this refers to a 9% rise in hotel prices. When you look at the language used however, the articles are more circumspect with The Guardian saying that 'some analysts' have made the claim which you could probably say about just anything! Looking closer at the figures, it is highly unlikely that even a star of Swift's scale can have that effect on the whole UK hotel market. There are other factors cle...

Labour now have the big majority the polls predicted and as ever a change in government provokes both caution and hope among the investment community as it considers how it might be impacted by a change in government policy. It is early days for the new government but we do have the pledges in Labour's manifesto to review to understand their approach to financial services. Let's run through them.  Pledge 1.  "Deliver inclusive growth of the UK’s financial services sector by scalling regional financial centres alongside established hubs in London and Edinburgh and unlocking the full potential of the mutuals sector." If we ignore the spelling mistake, this is similar in principle to what the Conservatives called 'levelling up' and may provide local opportunities for growth.  Pledge 2.   "Enhance the international competitiveness of the UK’s financial services sector by pursuing a more joined up and innovation-centred approach to regulation and supervision, ...

So, Labour have returned to power in the July 2024 UK election with a huge majority, if not a corresponding share of the popular vote thanks to the quirks of the first past the post system in the UK. Naturally this change in government leads to concerns among investors as to how their investments will fare within the UK, notwithstanding the wider global context of instability with the US election later in the year and ongoing troubles in Ukraine and the Middle East.  Throughout the campaign Kier Starmer has stressed his desire for growth and to try to reassure voters that the economy is in safe hands with Labour. Encouraging sounds in principle. So, how should you react? Despite Brexit the UK economy is still very much subject to the wider changes in the world and the markets have known for a long time that a Labour majority was highly likely so will have factored that change in already. Also on the cards are signs of a closer approach to the EU, albeit one short of rejoining the C...