What elections in France and the UK mean for markets

Katie Martin (0:00)

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Pushkin.

We've had a serious outbreak of democracy in Europe over the past couple of weeks. First France, then the UK, then France again. And it's been exhausting, quite frankly. But markets seem to be taking it all in their stride, despite success for left and center parties that investors don't generally like. Today on the show, we're gonna ask, is this very silly and complacent? This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT in London. And I'm joined by a man who is no stranger to picking through government spending plans, Chris Giles. Chris, thanks for joining us on the show again.

Chris Giles (1:10)

It's a pleasure, Katie.

Katie Martin (1:12)

First off, somehow it's not even a week since the UK election, if you can believe it. Have you recovered?

Chris Giles (1:19)

Only just. I was up all night on Thursday night and I was scoring it on a little wall chart I had.

Katie Martin (1:26)

You had felt tip pens, all different colors and everything.

Chris Giles (1:29)

Felt tip pens, everything. It was great fun.

Katie Martin (1:31)

What was your standout moment of the night?

Chris Giles (1:34)

I think the standout moment of the night actually was in the following morning at about seven o'clock when the former prime minister, and often known as a bit of a lettuce Liz Truss, lost her seat in the biggest swing of all. Essentially, everyone in that part of Norfolk, which is in the East Anglia, ganged up against her and another candidate squeaked through.

Katie Martin (1:55)

She looked sort of confused by the whole situation.

Chris Giles (1:58)

Yeah, she wasn't expecting it. I don't think any of us were really.

Katie Martin (2:01)

No.

Chris Giles (2:02)

But it's not entirely surprising after you blow up the country in 49 days.

Katie Martin (2:09)

We will come on to that in a second. So we've got UK and France. Let's start with the UK. We have a new Labour government. We have a new chancellor, Rachel Reeves, a woman.

Chris Giles (2:18)

A first woman.

Katie Martin (2:19)

What will these ladies think of next?

Chris Giles (2:21)

I don't know. They've been prime minister, they've been chancellor.

Katie Martin (2:26)

Mixed results. But yes, she's the first woman to be chancellor of the UK in like 800 years that the role has existed. So props to Rachel Reeves.

What is she up to so far?

Chris Giles (2:39)

She's been actually really rather busy. I mean, it's not been the fireworks when Labour came in in 1997 of giving the Bank of England independence in the first week.

But she has done about everything you could do to tear up restrictive planning regimes, which have stopped building of housing, particularly in rather affluent areas and essential infrastructure like onshore wind farms. And there's stuff you can do overnight. You can sort of change planning guidance because that's just written by whatever government's in power. And they've done that. So they've done about as much on that as they can very quickly.

Katie Martin (3:18)

It's only Tuesday.

Chris Giles (3:19)

And it's only Tuesday.

Katie Martin (3:20)

The election was only on Thursday.

Chris Giles (3:23)

And today, they've also essentially merged the UK Infrastructure Bank and the British Business Bank to create a National Wealth Fund, I think they're calling it, which has got former Bank of England Governor Mark Carney seal of approval. But essentially, that's just going to try and lever in by partnering with the private sector to try and encourage private sector investment. I mean, those things already exist.

It's not going to be that large. I say that quietly. But doesn't mean it's a bad thing at all.

Katie Martin (3:51)

Yeah, yeah. Now, the thing is, all of this is sort of quite showy, and it's like, look at us, we can rip up rules and we can get things done quickly. But over the longer term, something has to give, right? Because in the election campaign, the Labour Party was saying, we're not going to put up taxes. There's a little cluster of taxes that we're going to put up, but by and large, we're not going to put up taxes.