The main opposition centre-left Labour party is later today set to sideline its highly-trailed GBP28bn 'green investment' plan that it has previously indicated would be a key pillar of its manifesto ahead of the general election expected later in 2024. Policies of opposition parties would not ususally garner much market interest. However, the strong likelihood of Labour coming to power in the election (84% implied probability of winning a majority according to betting markets) means that policy announcements by Sir Keir Starmer are likely hove into view as the election approaches given their potential impact on gov't finances and the overall state of the British economy.
- When first announced in Sep 2021, the GBP28bn plan that included major offshore wind network construction and development of electric vehicle infrastructure, was due to be implemented in Labour's first year in power. This was subsequently pushed back to halfway through the parliament.
- With households tackling inflationary pressures and a high tax burden, it would appear Labour has sought to burnish its economic credentials rather than pursing their previously stated green energy aims. The party has a set of states 'fiscal rules', one of which is seeing gov't debt decline as a proportion of the economy by the end of the next parliament.
- The jettisoning of the GBP28bn pledge is seen as an attempt to ensure these rules are met and fend off Conservative attacks about the green investment plan pushing up taxes.
Source: Smarkets. N.b. Purple line-No overall majority, Blue line-Conservative Majority