Barclays CEO says difference in Labour and Conservative economic policy is ‘fairly minimal’

Finance

LIVERPOOL, U.K. – Oct. 11, 2023: Britain’s main opposition Labour Party leader Keir Starmer applauds a speaker the final day of the annual Labour Party conference in Liverpool, northwest England, on October 11, 2023.
Paul Ellis | Afp | Getty Images

Political risk in the U.K. is “far less than it’s ever been” as the difference between the ruling Conservative Party and main opposition Labour on economic policy is “fairly minimal,” Barclays CEO C.S. Venkatakrishnan said Thursday.

The U.K. is set to hold a General Election later this year, and the latest polling consistently suggests a landslide Labour victory, bringing an end to fourteen years of Conservative rule.

Since current Labour leader Keir Starmer took the reins in April 2020, the party has transformed itself from the hard-left offering that suffered a crushing election defeat in 2019 to a centrist, pro-business alternative to Prime Minister Rishi Sunak’s Conservatives.

Labour’s Shadow Finance Minister Rachel Reeves has been at the World Economic Forum in Davos, Switzerland this week, making the party’s case for overseas business investment into the U.K.

She told CNBC Wednesday that the party’s focus was on powering improvement in living standards through economic growth, not raising taxes on business or high earners.

“I think the political risk in the U.K. is far less than it’s ever been,” Venkatakrishnan told CNBC at WEF.

“This election, whenever it comes, is not Margaret Thatcher with James Callaghan. The difference in economic policies between the two, and they’re both striving to say so, are fairly minimal,” he said, referencing two former British leaders.

Labour’s “five point plan for growth” includes a new fiscal lock to restore economic stability, mass reforms to planning laws to build 1.5 million new homes, and a new industrial strategy to generate investment in the life sciences, digital, creative, financial, clean power and automotive industries.

Despite the U.K.’s well-documented economic sluggishness and inflation still running at 4%, the Barclays boss also said he is “very optimistic” about the outlook for the British economy, and that the U.K. consumer is in “very decent shape.”

“These pent up savings have been getting eroded. On the other hand, it’s a floating rate mortgage market and a lot of the mortgage adjustment has happened, because the average term is about three years fixed and we’ve had three years of rising rates. Energy prices have calmed down, so the two things that hit the pocket book are calming down, and I will say that I’m very optimistic on the U.K.,” he said.

“I think that growth is not great, but growth is fine. It’s not as strong as the United States, but there are so many institutional advantages in the U.K., and it’s the home of so much innovation, so much technology.”

U.K. gross domestic product fell by 0.1% between July and September, after flatlining in the prior three months, but has proven more resilient than many forecasters expected in the face of a sharp rise in interest rates over the last two years.

The next round of quarterly data due in February will show whether the economy has entered a technical recession, defined as two consecutive quarters of GDP shrinkage.

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