The British vote in stability, but will they actually get it?

This is Bloomberg Opinion Today, a triumphant tallying up of Bloomberg Opinion’s British election opinions. Sign up here. GMO that’s good fo [Bloomberg]( This is Bloomberg Opinion Today, a triumphant tallying up of Bloomberg Opinion’s British election opinions. [Sign up here](. Today’s Non-UK Must-Reads - GMO that’s good for [the planet](. - Unhappy 75th birthday, [NATO](! - The [riskiest businesses]( of India’s banks. - � [deglobalized](. - No easy disconnect from [China](. In the UK, Labour Wins Big: Good News and Bad News Election Day: The way forward in Central London Photographer: Howard Chua-Eoan/Bloomberg As upheavals go, the massive victory of the Labour Party over the long-ruling Conservatives was relatively sedate — apart from all the yelling from the losers, mo:stly directed at each other. Perhaps it was because it was largely foretold by opinion polls. They had been broadcasting Armageddon for the Tories since Prime Minister Rishi Sunak announced the July 4 elections on May 22. With at least 412 out of 650 seats, it’s the biggest majority for Labour since Tony Blair’s 1997 victory took the leadership from Conservative Prime Minister John Major. Sunak’s party won only 121 contests. Former Prime Minister Liz Truss (infamously in office only 49 days amid [invidious comparisons]( to a head of iceberg lettuce) lost her parliamentary seat. While in Downing Street, she spooked the bond market with her attempt to foist unfunded tax cuts on the country, as John Authers [reminds]( us. Several former Tory cabinet ministers also lost their contests. (See more analysis of the election in our [livestream](.) Adrian Wooldridge tells us there is [much promise in the UK’s new prime minister](, Keir Starmer. First, he will deliver stability to a country that has seen five Tory prime ministers twist in and out of Downing Street over the last 14 years. The Conservatives had become a many-headed hydra, each venomous maw snapping at its coevals, poisoning the entire body politic. In contrast, Labour has only one real head — Starmer, who purged the organization of its radical left. Says Adrian: “This new stability is also in contrast to the chaos in much of the democratic world. In America, the chances of a second Donald Trump administration are increasing. In France, the political system faces paralysis. In Germany, the government is weak. Britain’s relative newfound stability could make it an attractive refuge for capital and turn Starmer into a leader among the dwindling band of defenders of the liberal order.” Don’t expect Brexit — a gift of Prime Minister David Cameron (2010-2016) — to be undone, though. The country is too traumatized to revisit that debacle. Still, the new government is likely to be more cooperative with its immense trading partner, the European Union. Says Adrian: “Starmer is by training a human rights lawyer who believes in the international liberal order, and by instinct an institutionalist who believes in solving problems through collaboration and due process.” Expect more tussling over the legacy of Brexit. While the pro-EU Liberal Democrats are now the third largest party in Westminster after the Tories, anti-EU gadfly Nigel Farage is in Parliament too, as one of four MPs of his fledgling Reform party. Adrian says the new premier’s tactics in handling Britain’s “dismal growth rate” will bear watching. Starmer, he says, “will approach that from different directions and different intellectual traditions — building houses as well as creating a national energy company, and improving training as well as reforming planning.” A huge raft of investors — UK households and companies as well as foreign interests — are waiting for Labour’s stability to throw their money into the British economy. “A spell of high temperatures — and England progressing in the men’s UEFA European Football Championship — could heighten the feel-good factor,” [says]( Andrea Felsted. “Add the Paris Olympics and Wimbledon to the summer of sport and there could be an unleashing of pent-up demand.” There are fond memories of Tony Blair’s big win with “New Labour” back in 1997 and the two-and-a-half years of boom times that came with it. While it started well, [says]( Merryn Somerset Webb, “it all came to a rather sticky end.” From 2000 to mid-2007, “the London stock market was outperformed by all major stock markets bar that of Japan. By 2010, the market had recovered most of its losses, but New Labour was gone.” She adds: “Ask what goes wrong for markets under Labour governments, and you rarely have to look far for the answer: tax and regulation.” If tax increases happen in the autumn, says Andrea, “then it could cast a shadow over what should otherwise be a sparklier Christmas than 2023, given that the cost-of-living crisis is easing.” John had [this to say about]( the MP Starmer is putting in charge of the country’s finances: “Rachel Reeves will have the miserable job of trying to turn around the British economy as chancellor. Her legacy will probably be built by her response to challenges that we cannot now foresee, and her chancellorship may well be highly consequential.” It’s worth noting that Labour polled traditional numbers but gained tremendously because of historically low turnout. Conservative voters, it seems, punished the Tories by abstaining, not by rewarding Starmer and company with support. So, while Labour’s parliamentary dominance is overwhelming, it shouldn’t be interpreted as popular approbation. As Adrian [notes in another column](: “Taken together the Conservatives and Reform won a higher proportion of the vote than Labour.” “But perhaps before worrying,” says Adrian, “we should allow ourselves time for celebration. Starmer is well-positioned to restore some energy into a British government machine that has been plagued by division and chaos in the center.” For the inhabitants of this beleaguered nation, Adrian adds, “he stands a good chance of restoring global respect for a country that has too often in recent years become a laughingstock.” One Possible Path for Starmer: Skyward Vertical city: A Hong Kong-style residential future for Britain might not be bad. Photographer: Howard Chua-Eoan/Bloomberg The new prime minister has set a goal of building 1.5 million homes over the next five years to ease the UK’s housing shortage. Matthew Brooker [has one suggestion](: higher-density residential developments, the easiest examples being high-rise apartment buildings. Matthew swears by the example of tightly packed Hong Kong, where he lived for more than two decades. “Some Hong Kong mass-residential districts can look as intimidating as Judge Dredd’s Mega-City One from the outside,” he admits, “but get inside them and the experience is very different. There’s an addictive convenience to living on top of a mall that contains everything you need from supermarkets and cinemas to doctor’s surgeries and an underground metro station.” He says, “There’s no reason this model can’t work in London and surrounding towns that are within commutable distance.” Indeed, a planning document from the Mayor of London’s office suggested as much as early as 2021. Telltale Charts: Starmer’s Challenges “Labour’s outspoken shadow health secretary Wes Streeting has rightly said the [National Health Service] is a service not a shrine. He has promised to focus on efficiency and outcomes, overcoming the kind of institutional defensiveness that has been exposed most recently by a damning report into a decades-old contaminated blood scandal. He seems determined to place more focus on preventive care and community care. Labour has proposed to halve wait times exceeding 18 weeks within five years of taking office. And yet such plans, and Streeting’s broader goals, take resources — likely in the form of either higher taxes or the introduction of charges for some basic services, along with structural change to the way the NHS operates. So far, nothing suggests that degree of boldness.” — Therese Raphael in “[Britons Have Good Reason to Lose Faith in the NHS](.” Source: The King’s Fund analysis of NHS England data, adapted from Lee, G. (2023) “The cure for Britain’s productivity problem lies in fixing politically tricky issues with planning, investment, trade and the spread of knowledge. What the next government must do, at the very least, is create a more stable political environment, stick to whatever investment plans it can afford, and ensure new property can be built in the parts of the country that are straining to grow. There is no quick fix and no easy bargains.” — Paul J. Davies in “[The UK Has a Productivity Problem. Tory Rule Made It Worse](.” Source: Organization for Economic Cooperation and Development “There’s plenty a new defense minister could do to spend the UK’s still-substantial £57 billion budget more effectively, all of which would involve a little humility: End the gold-plating of new designs like [the £5.5 billion ($7 billion) Ajax armored-vehicle project]; buy more kit off-the-shelf or build it with others; outsource to joint ventures in countries with lower manufacturing costs, including Ukraine (where BAE Systems Plc established a presence last year), or Turkey (currently negotiating a free trade deal with the UK, which it sees as a good fit as a provider of defense design and management services).” — Marc Champion in “‘[Global Britain’ Is Too Big for the UK’s Defense Britches](.” Source: UK Ministry of Defence response to parliamentary question in January 2024 Further Non-UK Election Reading The luck of [Gautam Adani](. — Andy Mukherjee The resilience of [Chinese tech](. — David Fickling The desperation of [Emmanuel Macron](. — Lionel Laurent The cluelessness of [Donald Trump](. — Marc Champion The dilemmas of [Shari Redstone](. — Chris Hughes The insight of [Li Keqiang](. — Shuli Ren The vulnerability of [Taiwan](— Minxin Pei The inflation of [ancient Rome]( — Daniel Moss The choices of [Christine Lagarde]( — Marcus Ashworth The volatility of [European electricity]( — Javier Blas The value of [Spanish banks]( — Paul J. Davies Notes:  Please give some lip (stiff upper or otherwise) and additional feedback to Howard Chua-Eoan at hchuaeoan@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](