London

The inauguration of the Labour government has sparked new momentum in Britain’s financial markets. According to source, on the first day under the new government, the FTSE 250 index, which focuses on domestic companies, rose by 0.86%. Concurrently, the country’s 10-year bond yield decreased by 0.8 percentage points.

In economic indicators, the GDP for the first quarter of this year saw a 0.6% increase, while the annual Consumer Prices Index rose by 2% in May, aligning with expectations of an interest rate cut by the Bank of England.

BOX:

Low Investment

Investment in Britain has declined, with the overall rate falling from about 23% of GDP in the late 1980s to around 17% since 2000, according to Economics Observatory data. In contrast, G7 peers maintain investment rates between 20% and 25%. Tim Besley, Professor of Economics and Political Science at LSE, mentioned that the new Labour government must prioritize boosting investment.

Tax Rate

Tax policy emerged as a hot topic in Britain’s general election, with former Prime Minister Rishi Sunak pressing Labour leader Keir Starmer for clarity. In response, Labour pledged not to increase income tax, national insurance, or value-added taxes. According to Iain Begg from LSE, this commitment limits Labour’s options, as higher debt levels could constrain economic maneuverability.