What could the General Election result mean for your finances?

What could the General Election result mean for your finances?

The shock 2017 General Election result means political uncertainty is mounting once again. A hung parliament has, essentially, thrown everything up in the air. Who will be Prime Minister? Will there be a coalition? What will happen with Brexit negotiations? What does this all mean for you and your money?

Overnight, stock markets reacted like a yo-yo as the votes were coming in, and further volatility looks inevitable. Although the pound suffered a sharp decline as the final result was announced, it was smaller than expected given the hung parliament. Despite rising inflation, it is thought unlikely that the Bank of England will raise interest rates any time soon, although it will offer reassurance that it stands ready to act in the event of financial instability.

While a hung parliament was not the result expected, political uncertainty is nothing new. Asset prices in the UK and, to a certain extent globally, already discounted a period of extended uncertainty, given the complexity of delivering on the outcome of the EU referendum last year.

The election result and your investments and pensions

The main message we are getting in the early aftermath of the election result is ‘do not panic’. Despite the uncertainty, many fund managers are actually anticipating buying opportunities. Global demand is still improving, and any more signs of a ‘softer’ Brexit could potentially bode well for UK companies.

Investors are being encouraged to resist temptation to make any ‘short-term, knee-jerk reactions’. It is hard to know what will happen over the medium term, as the election result has generated more questions than answers. While it is fair to say the market may be a bit ‘wobbly’ for a while, many fund managers believe this will not affect the earnings and profitability of companies over the next six to 12 months.

When it comes to retirement, the election result, again, means uncertainty is abound, as Conservative and Labour policies differed hugely in their election manifestos. But economists can only forecast what might happen for now. A new government could prompt another Budget, which could mean it will be some time yet before any policies become clear.

Your long-term wealth planning

There are various outcomes possible on the back of the election result, but no one can second-guess the economy. At the moment there can only be speculation, as the UK waits to see what happens over the next few days, and even weeks. But, you can be certain that focusing on your own finances, your long-term investment strategy and your future wealth are now more important than ever.

If you would like to discuss your investments, pensions, or any area of your wealth management, please get in touch.