British vote in stability. Will they get it?

by Howard Chua-Eoan

As upheavals go, the massive victory of the Labour Party over the long-ruling Conservatives was relatively sedate — apart from all the yelling from the losers, mostly directed at each other.

Perhaps it was because it was largely foretold by opinion polls. They had been broadcasting Armageddon for the Tories since Prime Minister Rishi Sunak announced the July 4 elections on May 22. With at least 412 out of 650 seats, it’s the biggest majority for Labour since Tony Blair’s 1997 victory took the leadership from Conservative Prime Minister John Major.

Sunak’s party won only 121 contests. Former Prime Minister Liz Truss (infamously in office only 49 days amid invidious comparisons to a head of iceberg lettuce) lost her parliamentary seat. While in Downing Street, she spooked the bond market with her attempt to foist unfunded tax cuts on the country, as John Authers reminds us. Several former Tory cabinet ministers also lost their contests.

Adrian Wooldridge tells us there is much promise in the U.K.’s new prime minister, Keir Starmer. First, he will deliver stability to a country that has seen five Tory prime ministers twist in and out of Downing Street over the last 14 years. The Conservatives had become a many-headed hydra, each venomous maw snapping at its coevals, poisoning the entire body politic.

In contrast, Labour has only one real head — Starmer, who purged the organization of its radical left. Says Adrian: “This new stability is also in contrast to the chaos in much of the democratic world.

In America, the chances of a second Donald Trump administration are increasing. In France, the political system faces paralysis. In Germany, the government is weak. Britain’s relative newfound stability could make it an attractive refuge for capital and turn Starmer into a leader among the dwindling band of defenders of the liberal order.”

Don’t expect Brexit — a gift of Prime Minister David Cameron (2010-2016) — to be undone, though. The country is too traumatized to revisit that debacle. Still, the new government is likely to be more cooperative with its immense trading partner, the European Union.

Says Adrian: “Starmer is by training a human rights lawyer who believes in the international liberal order, and by instinct an institutionalist who believes in solving problems through collaboration and due process.” Expect more tussling over the legacy of Brexit. While the pro-E.U. Liberal Democrats are now the third largest party in Westminster after the Tories, anti-E.U. gadfly Nigel Farage is in Parliament too, as one of four MPs of his fledgling Reform party.

Adrian says the new premier’s tactics in handling Britain’s “dismal growth rate” will bear watching. Starmer, he says, “will approach that from different directions and different intellectual traditions — building houses as well as creating a national energy company, and improving training as well as reforming planning.”

A huge raft of investors — U.K. households and companies as well as foreign interests — are waiting for Labour’s stability to throw their money into the British economy. “A spell of high temperatures — and England progressing in the men’s UEFA European Football Championship — could heighten the feel-good factor,” says Andrea Felsted. “Add the Paris Olympics and Wimbledon to the summer of sport and there could be an unleashing of pent-up demand.”

There are fond memories of Tony Blair’s big win with “New Labour” back in 1997 and the two-and-a-half years of boom times that came with it. While it started well, says Merryn Somerset Webb, “it all came to a rather sticky end.” From 2000 to mid-2007, “the London stock market was outperformed by all major stock markets bar that of Japan. By 2010, the market had recovered most of its losses, but New Labour was gone.”

She adds: “Ask what goes wrong for markets under Labour governments, and you rarely have to look far for the answer: tax and regulation.” If tax increases happen in the autumn, says Andrea, “then it could cast a shadow over what should otherwise be a sparklier Christmas than 2023, given that the cost-of-living crisis is easing.”

John had this to say about the MP Starmer is putting in charge of the country’s finances: “Rachel Reeves will have the miserable job of trying to turn around the British economy as chancellor. Her legacy will probably be built by her response to challenges that we cannot now foresee, and her chancellorship may well be highly consequential.”

It’s worth noting that Labour polled traditional numbers but gained tremendously because of historically low turnout. Conservative voters, it seems, punished the Tories by abstaining, not by rewarding Starmer and company with support. So, while Labour’s parliamentary dominance is overwhelming, it shouldn’t be interpreted as popular approbation. As Adrian notes in another column: “Taken together the Conservatives and Reform won a higher proportion of the vote than Labour.”

“But perhaps before worrying,” says Adrian, “we should allow ourselves time for celebration. Starmer is well-positioned to restore some energy into a British government machine that has been plagued by division and chaos in the center.” For the inhabitants of this beleaguered nation, Adrian adds, “he stands a good chance of restoring global respect for a country that has too often in recent years become a laughingstock.”

Howard Chua-Eoan is a columnist for Bloomberg Opinion covering culture and business. He previously served as Bloomberg Opinion’s international editor and is a former news director at Time magazine.