Election 2015: cross your fingers we don’t have to do this all again

With no obvious front-runner, the outcome of the election is far from clear. But no matter who wins – or doesn’t win – it will have a huge impact on your finances, says John Stepek.


Regardless of who wins the election, today will have a huge impact on your finances

This is it the big day.

I'd like to say that tomorrow will bring some sort of relief, a break from all this nonsense.

Unfortunately, given the state of the polls, it might be just the beginning.

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Polls are often wrong, of course. But if reality in any way reflects today's figures, with Labour and the Conservatives neck and neck, then we could be doing it all again in a few months.

Whatever happens, it's going to matter to your finances. So despite the ennui, it's worth paying attention

I don't care who you vote for or if you even vote

I think it's important to exercise your right to stick a ballot in the box, even if it's a spoiled one. And I think it shows respect to the forebears who fought and won that vote, for themselves and for you.

But I think a lot of things, and you don't have to agree with a single one of them.

What I will say is that the outcome today is going to have a big impact on your investments and the way you plan your finances, regardless of who wins or who doesn't.

A Conservative-led government promises more of the same: there's an expressed desire to cut government spending, even although that may not in fact materialise; there's a general sense that taxes shouldn't be higher than they are in an ideal world; and you'd expect the pensions reforms introduced so far to remain in place, so that might make planning for retirement a bit easier (until the next election, at least).

A Labour-led government promises higher taxes on high earners. There have been promises of intervention in various markets rental property, energy and public transport, for example. There's a sense that there's no real problem with government spending, beyond the fact that the deficit seems to be something that bothers a significant proportion of the electorate.

The difference in attitude to public spending suggests that gilt markets and sterling will be wobblier in the event of a Labour victory. That shouldn't be underestimated, given that there are far deeper faultlines in global bond markets that may explode to the surface in the next five years.

Neither party will fix' the housing market. Prices are perhaps a little more likely to fall under Labour, but that's mainly in the markets that wealthy overseas buyers have been active in. So that'll remain a key driver of inequality and a massive drag on our national productivity regardless of who gets in.

A shame, that. But politicians will only discover the courage to tackle the housing market when the number of voters penalised by it outweighs those who believe they benefit.

Both parties plan to cut pension tax relief for higher earners, so if you're in a position to worry about that, get your skates on.

Both parties face constitutional madness. Given support for the SNP, Britain could quite easily break up in the next five years (even if only by the backdoor), and it's hard to see how that issue is settled otherwise.

EU membership will be a big issue under a Conservative-led government. But it might become one anyway if you're not holding the line against further integration, then Europe has an interesting habit of sneaking up on you.

And regardless of what they say, both parties will probably need to raise taxes by more than they admit. And it'll come early in the parliament, because that's when the pain has the lowest political cost.

And what if no one gets in?

That could leave us with all manner of upheaval and market volatility as various outcomes become more or less likely.

At MoneyWeek, we think a Conservative government or a repeat of the current coalition victory will be the most investor-friendly outcome. There's an element of stability there, which is helpful; and, while they can't seem to stop tinkering with things, there's an underlying respect for individual choice and responsibility that keeps them from doing anything too nutty.

But we might not get that outcome. And that's why we're trying to make sure that our readers are best placed to deal with whatever happens as soon as the results are through. If you haven't already signed up for our post-election coverage, do it now you've only got until the polls close tonight!

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John Stepek

John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.