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What do investors need to be aware of in the Conservative manifesto?
19/05/2017 , News Team

Prime Minister Theresa May has revealed the Conservative party manifesto promising a "mainstream government that would deliver for mainstream Britain". Mrs May stated that a strong economy and delievring Brexit were top priorities from the conservative party.

The manifesto measures include balancing the budget by 2025, increasing the national living wage by 60 percent and dropping the 2015 pledge not to raise income tax or National Insurance.

Dean Turner, economist at UBS Wealth Management, considers tax and spending commitments, and the deficit to be of greatest interest to investors among the measures announced. 

"Not committing to close the budget deficit until the middle of the next decade should provide some fiscal flexibility through the Brexit negotiations if it is needed," he said. "It looks as though there is some scope to amend taxation, which could give the chancellor further room for manoeuvre. However, given the current size of the national debt, gilts markets will remain sensitive to any developments on the fiscal side."

Looking at the long term, Mr Turner said: "The National Productivity Investment Fund should be welcomed given the woeful productivity numbers we currently have. Planned infrastructure investment across the regions and other measures towards rebalancing the UK’s economy away from the South East and London are also important if the economy is to prosper and reach its full potential.”

For Alex Davies, chief executive of Wealth Club, it’s not about what’s in the Conservative Manifesto, it’s about what’s not in it. 

"The tax guarantee they previously made has gone, paving the way for increases to income tax and national insurance contributions. This is clearly concerning to many of their traditional voters. In a recent survey, our clients said the policy changes they were most worried about were tax-specific and included an increase in inheritance tax (46 percent), income tax (45 percent) and capital gains tax (40 percent). We think tax rises are inevitable if there is a Conservative government. All winning parties between 1992 and 2010 have raised taxes within 12 months of being elected. Typically none of these measures had been included in their manifestos.

“While the manifesto is light on support for business, there are some positive aspects. For example, we welcome the government’s pledge to help innovators and start-ups, by encouraging early stage investment and considering further incentives under the UK’s Enterprise Investment Scheme and Seed Enterprise Investment Scheme. This is positive news for British business and for investors who could see further incentives to provide much needed capital to our entrepreneurs. But the devil will be in the detail, and we are keen to see more information as to how this would be implemented,” Mr Davies concluded.


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