Markets eye the King’s Speech

What will King Charles’ speech at the State Opening of Parliament tell markets about UK policy in the year ahead? By Garry White

 
On Wednesday 17 July, the Labour government will announce its plans for the first year of the new parliament. The King’s Speech will set out the main new laws planned in a large 35-bill programme. It will be followed by a lengthy parliamentary debate on the aims and likely actions of the government led by Prime Minister Keir Starmer.

The government said in advance that its main intention is to make growth the priority. Rising living standards and more economic activity were a central part of the five main themes set out in Labour’s manifesto, which also included a National Health Service fit for the future, the UK as a clean energy superpower, halving serious crime and reforming childcare and education to offer more opportunities for more people.

The likely leading measures are listed below, starting with the ones oriented to economic growth and clean energy. Various other measures have been mentioned as possibles.
 

1. Bill to enact that every fiscal event needs to be accompanied by an Office for Budget Responsibility (OBR) forecast, to underpin an amended fiscal framework.
2. Bill to establish the National Wealth Fund, to spend £7.3bn over a five-year period to promote the green transition and other industrial measures.
3. Bill to establish Great British Energy, which will spend £8.3bn over five years to expand renewable power in the UK.
4. Bill to manage the railway as train service contracts expire and revert to public ownership.
5. Possible bill to manage and facilitate clean-power activity.
6. Bill to delegate more skills, energy, planning and transport powers to mayors and regional government.
7. Bill to improve workers’ rights, limiting zero-hours contracts, stopping ‘fire and rehire’ and improving equal-pay provision for all.
8. Bill to give more powers to a new Border Command.
9. Crime and policing bill.
10. Provisions for the auto-registration of electors.

 
The main economic measures wish to promote faster growth through investment.
 

The investment bodies

 
The sums of money the two new public investment bodies can spend are limited in the first year after establishment. Additionally, the strategy relies on them being able to attract three times as much private investment as they lay out for the public sector.

The National Wealth Fund is like the British Investment Bank and the UK Infrastructure Bank set up by the previous government. The former lost £147m in 2023 on assets of £3.8bn. The latter lost £21m in the 2022-3 financial year on assets of £664m. Both were charged with using some of their public money to promote green investments.

The government could consider incorporating them fully into the new bodies they are establishing, to control overhead costs and provide a starting portfolio. They will be using the Infrastructure Bank this year to speed up implementation of the spend.
 

The delegations to regional government

 
These could work well where there is a successful and positive devolved government. There can also be difficulties in trying to deliver a faster pace of national progress if devolved government is using its freedoms to pull in other directions. The more bodies that have powers, the more complex it can be to get decisions taken and to ensure a speedy follow up.
 

New employment law

 
Better employment rights are popular with many, but the legislation needs to be practical and to be based on an understanding of some employees’ needs for flexibility and of employers’ requirements to be able to sustain a profitable business.
 

Garry White is Chief Investment Commentator at Charles Stanley