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Betting Markets See Labour As Solid Favourites For Majority


While the next UK general election is not likely until May 2024, the state of support for the gov't of PM Rishi Sunak remains important for financial markets given that as the run-up to the election approaches the gov't could shift its restrained fiscal policy stance towards being more expansionary in an effort to win votes.

  • At present, according to data from Smarkets betting markets give a 47.6% implied probability that the main opposition centre-left Labour Party win a majority at the next election.
  • There is a 39.1% implied probability that the election results in a hung parliament where no party holds a majority. The governing centre-right Conservatives are given just a 11.6% implied probability of retaining a majority (the lowest level recorded since the data began in Sep 2020).
  • For markets, the hung parliament scenario is the one that delivers most uncertainty. Here, Sir Keir Starmer's Labour would end up in coalition either with the centrist Liberal Democrats (raising the prospect of a second referendum to re-enter the EU) or the Scottish National Party (almost certainly resulting in a second Scottish independence referendum).
Chart 1. Betting Market Implied Probability of Overall Majority at Next General Election, %

Source: Smarkets

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