London: Whichever country’s main party wins next month’s general election, Britain will see little difference in public spending, with public coffers hit by Covid spending.
The main opposition Labor Party, which is expected to defeat the ruling Conservatives in a national vote on July 4, has pledged investment in key areas such as health and education, but said it must balance the books.
Conservatives, led by Prime Minister Rishi Sunak, promised tax cuts that they said would not cause new chaos in the market.
“Both sides propose the same tax policy, there is a gap between the two,” Daniel Sopher, senior partner at tax specialist Sopher + Co, told AFP.
Labor’s Keir Starmer and the Conservatives are seeking to prevent a repeat of the tax cuts unveiled in the October 2022 budget that have not yet been paid for.
Liz Truss’ 49-day tenure as prime minister also collapsed.
The UK economy is now in a more stable position after emerging from a mild recession and with inflation normalising.
The situation appears more relaxed compared to neighboring France, where the upcoming election has led to higher borrowing costs for the country’s government.
President Emmanuel Macron stunned France with a vote after his centre-right National Rally (RN) party lost European elections earlier this month.
The French vote will be a showdown between the RN and the leftist New Popular Front, dominated by the leftist France Unbowed.
Investors are attracted by the promises of high prices of the parties.
In the UK, if Labor wins power, it promises tighter spending controls.
Rachel Reeves, Labor Finance spokeswoman, said: “I want investors to look at the UK as a safe haven in a turbulent world, a place where they can invest with confidence in a world where other countries tend to be more populist”. a recent gathering of business leaders.
Britain’s public debt has hit 100 percent of GDP in recent months – a level not seen since the 1960s.
“The reason why Starmer is so popular … (is that he has proposed radical change),” said James Wood, a senior lecturer in political economy at Cambridge University.
“He’s basically a red-tie conservative,” he said.
If Labor wins the majority, party leaders may face pressure from their own members to loosen budget rules, analysts say.
“I don’t think anyone in the market will be upset by another change in tax rules,” said Jonathan Portes, an economist at King’s College London, noting that the Conservatives have changed them several times since coming to power in 2010. .
According to Sofer, any party in power will “raise taxes” to finance public services.
“There’s only a limit to what you can increase in debt,” he said.
UK faces strained finances after election
