 "Tourists pass by the entrance to Downing Street, ahead of the UK general elections on July 4, in London, Britain, July 3, 2024. Reuters")
As the UK gears up for its general election on July 4, 2024, global observers are paying close attention. Here are three primary reasons for this heightened interest:
UK’s is still the 6th largest economy
Despite facing political challenges, the UK continues to be a major economic force globally, ranking as the sixth-largest economy. This status makes its economic policies and leadership choices crucial for global markets.
In the first quarter of 2024, the UK economy grew by 0.6 per cent, a recovery from the contractions experienced in the latter half of 2023. This growth was primarily driven by the services sector, which saw a notable increase of 0.7 per cent.
Inflation in the UK has been a critical concern. As of early 2024, headline CPI inflation stood at 3.2 per cent, with core CPI inflation at 4.2 per cent. While energy prices have been decreasing, easing overall inflation, services inflation remains elevated due to high wage pressures.
The Bank of England has maintained a cautious stance on monetary policy, keeping interest rates at 5.25 per cent to curb inflation but indicating potential rate cuts later in the year if inflation continues to decline.
Business performance has shown resilience, with 95 per cent of businesses reporting active trading in early June 2024. Despite challenges, 16 per cent of trading businesses reported improved performance compared to the previous year.
Moreover, only 6 per cent of larger businesses experienced supply chain disruptions, a significant improvement compared to previous periods.
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Impact Shorts
More ShortsIf Labour comes to power, it plans to pursue new free trade agreements and standalone sector deals, including those in digital services and mutual recognition agreements, to boost service exports.
Additionally, Labour aims to lead global discussions to modernise trade rules and agreements, fostering deeper trade and cooperation through the World Trade Organisation and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The party supports the implementation of the OECD’s global minimum corporate tax rate and backs international efforts to ensure multinational tech companies pay their fair share of taxes.
The election will influence decisions affecting international trade, investment, and economic stability. The global community is keenly monitoring how the new government will shape economic policies, particularly in relation to trade relations post-Brexit, fiscal strategies, and regulatory changes.
A Labour win would be fresh amid a right-wing surge in Europe
A transition to a centre-left Labour administration in the UK would diverge from the current European trajectory, where far-right factions have been gaining momentum in recent years.
In France’s parliamentary elections, Marine Le Pen’s far-right, anti-immigration National Rally Party advanced towards becoming the dominant political party in France after the initial round of voting. The party secured one-third of the votes in a first round that saw a historically high voter turnout.
If this voting pattern persists in the crucial second round on July 7, it will signify an unprecedented rightward shift for France.
The recent European parliamentary elections also witnessed a surge in far-right representatives securing seats, with right-wing candidates in Italy, France, and Germany making strides by campaigning against immigration, supporting Ukraine, and opposing green environmental policies.
Although a Labour win would contrast with the prevailing political trend in Europe, Britain has also experienced increased support for far-right candidates in this election cycle.
Nigel Farage, known in the US as an ally of former President Donald Trump, has significantly influenced the movement leading to Britain’s “Brexit” from the European Union through his strong anti-immigrant stance.
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After years on the fringes of British politics and failing to secure a parliamentary seat in eight previous attempts, Farage appears poised to finally win the seat for his local constituency of Clacton in southeast England this year.
Farage’s far-right Reform Party is expected to win about five parliamentary seats, including Farage’s own. Nationally, YouGov projects Reform to have the support of about 15 per cent of the electorate. With zero current seats in the House of Commons, the party seems set for a notable rise in popularity.
Political analysts suggest Reform’s anti-immigrant rhetoric is primarily drawing votes away from the Conservative Party.
While Farage is unlikely to gain power soon, he is likely to re-enter the British political scene with significant public backing, potentially exerting considerable influence over the Conservative Party as it attempts to recover from a potentially devastating election.
This potential move, towards centrist and left-leaning policies, after years of Conservative rule, could offer a different political model focused on social justice and inclusive economic strategies, standing in stark contrast to the rising right-wing populism across Europe.
After all, UK is a veto-wielding power at the UN
As a permanent member of the UN Security Council, the UK’s foreign policy decisions have global implications, particularly regarding ongoing conflicts like those in Ukraine and Gaza.
Labour has committed to sustaining Britain’s military, financial, diplomatic, and political support for Ukraine.
The party supports efforts to hold Russia accountable for the war, endorsing calls for a Special Tribunal for the Crime of Aggression and collaborating with allies to seize and repurpose frozen Russian state assets to aid Ukraine.
Labour also advocates providing Ukraine with a clear path to NATO membership.
For the Middle East, Labour has stated that achieving long-term peace and security would be an immediate priority.
A Labour government would push for an immediate ceasefire in Gaza, the release of all hostages, adherence to international law, and a rapid increase in aid to the territory.
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The party has pledged to recognise a Palestinian state as part of a renewed peace process aimed at achieving a two-state solution, describing Palestinian statehood as “the inalienable right of the Palestinian people” and essential to Israel’s long-term security
The election results will shape the UK’s approach to international diplomacy, its commitment to alliances such as NATO, and its role in global security. The international community is closely watching how the new government will address these geopolitical challenges and what stance it will take in promoting peace and stability.
With inputs from agencies