The UK growth forecast is upgraded by Goldman Sachs following the massive victory of the Labour Party in the elections.

• Goldman Sachs revised its GDP forecasts for the U.K. for 2025 and 2026 by 0.1 percentage points.
• JPMorgan stated in a note that Labour's plans to loosen planning regulations and implement other reforms "rapidly" could "stimulate growth to some extent."

The Labour Party's victory in the UK's general election led Goldman Sachs to upgrade its growth forecast for the country on Friday.

The investment bank predicted that Labour's fiscal policy would slightly increase demand growth in the near-term and raised its GDP forecasts for the U.K. by 0.1 percentage points for 2025 and 2026.

The planning system could be reformed to increase housebuilding and productivity, public sector investment could increase potential output, and closer trade ties with the EU could reduce some of the costs of Brexit, according to Goldman Sachs economists in a note.

The economists warned that increasing taxes could discourage investment and Labour's promise to limit immigration could strain the labor market.

By 10:30 a.m. local time on Friday, the U.K.'s stock market had risen 0.29% in response to the election results.

The FTSE 350 index for household goods and home construction increased by 3.81%. Among the individual stocks within the sector, shares rose by 4.65%, increased by 4.2%, climbed by 3.45%, and Bellway moved 2.93% higher.

On Friday morning, Labour surpassed the necessary votes to govern alone, prompting Rishi Sunak to concede defeat. As a result, Keir Starmer, the leader of the center-left Labour, will become the new prime minister and claim victory. Experts predict that the Labour victory will positively impact the U.K. markets, particularly in the area of housebuilding.

On Friday, JPMorgan stated in a note that Labour plans to loosen planning regulations and implement other reforms promptly. While this may stimulate growth to some extent, the impact is likely to be modest and take time to manifest.

— CNBC's Ryan Browne contributed to this story.