The post-election jump in UK equities could just be the start of a sustained rally. Concerns Brexit and higher taxes under a Labour government mean that UK equity indices have underperformed over the last few years. However, the removal of the “Labour” risk at least means there is plenty of room for UK equities to outperform, especially if there is a fiscal stimulus early next year. Admittedly, Boris Johnson’s refusal to extend the transition period beyond 31st December 2020 has already caused the price of domestically-focused equities to drop back a little and could weigh on prices next year. But we still expect UK equity prices to rise by about 17% by the end of 2021, compared to rises of less than 10% for most developed markets.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services