Why markets welcomed the scale of the Starmer victory

Barring some unforeseen event, things really may be about to get better for UK plc under a new PM, says Chris Blackhurst

- Chris Blackhurst

Make no mistake, the markets liked the UK election result. That might seem perverse: after all, there will be a Labour government, traditionally no friend of big business and profit-seeking capitalists, with a thumping majority. If there was a case for a crashing pound, it was surely this.

Not a bit of it. On the release of the exit poll correctly predicting the result, sterling held firm. It was broadly unchanged against the dollar and the euro. Nor is anyone predicting a collapsing stock market. Bonds, too, are steady. In a word, investors are relieved. Even the size of the Labour victory has helped in that regard. A much closer outcome, that may only have led to a further ballot and political turmoil, would have created market volatility.

As it is, the scale of Sir Keir Starmer's triumph has provided certainty. In a world of upheaval, of wars, natural disasters brought on by climate change, the resurgence of the far right in France and Europe, a US election that is too close to call, that may yet see a change in candidate and could provoke civil discord, the UK has emerged as a beacon of calm.

It's not a source of worry any more. Rather, Britain has become a magnet for those looking for a safe haven for their money. The pound is back to where it was in 2016, when Britain voted to leave the EU. That's a reflection of traders and investors believing the rollercoaster since, as prime ministers have been and gone, is over.