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LONDON – Goldman Sachs on Friday raised its growth forecast for Britain following Labor’s victory in the UK general election.
In a note published on Friday morning, the investment bank said it expected Labour’s fiscal policy agenda to “moderately boost demand growth in the near term” and raised its UK GDP forecasts for 2025 and 2026 by 0.1 percentage point each. are 1.6% and 1.5%.
Goldman Sachs economists said in the report: “Reforms to the planning system can boost housing construction and productivity; increased public sector investment can boost potential output; and closer trading relations with the EU can alleviate some of the costs of Brexit.”
However, the economists added that they “believe that potential further increases in taxation could affect investment incentives, while Labor’s pledge to reduce net migration could affect labor supply.”
British FTSE 100 The stock was up 0.29% as of 10:30 a.m. local time on Friday as investors reacted to the election results.
The FTSE 350 Household Goods and Housebuilding Index rose 3.81%. Looking at individual stocks in the industry, persimmon The stock price rose 4.65% Taylor Wimpey up 4.2%, Bharat Development rose 3.45%, and Bellway rose 2.93%.
Labor has crossed the threshold needed to govern alone as outgoing Prime Minister Rishi Sunak conceded defeat early on Friday morning. Keir Starmer, the leader of the centre-left Labor Party, who will become the country’s next prime minister, was declared winner in the early hours of the morning. Analysts expect a Labor victory to boost the UK market over time, particularly in housebuilding.
“Labour intends to relax planning regulations and implement other reforms fairly quickly,” JPMorgan said in a note on Friday.
“This may stimulate economic growth to some extent, but the magnitude is likely to be small and will take time to materialize,” the investment bank said.
— CNBC’s Ryan Browne contributed to this article.
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