With only 34% of the national vote, Labour secured a decisive election win in Britain.

• The Conservative Party received nearly 24% of the national vote, while Labour only won 34%.
• Despite winning around 40% of the popular vote, smaller parties such as the Liberal Democrats, Reform UK, and Greens only gained 18% of the seats.

In the U.K.'s general election, the Labour Party won a significant parliamentary majority despite receiving only 34% of the total votes cast.

The Labour Party has won 63% of the total parliamentary seats, despite winning only 34% of the popular vote. The Conservative Party, on the other hand, has secured nearly 24% of the popular vote.

Despite winning nearly 43% of the popular vote, smaller parties including the centrist Liberal Democrats, right-wing Reform U.K. and the Greens gained just less than 18% of the seats available.

The "first past the post" system in the U.K. aided in the election of Members of Parliament to the House of Commons, where voters choose only one candidate from their local list in each of the country's 650 constituencies. The party that wins the most seats in the House of Commons usually forms the new government and its leader becomes prime minister.

Unlike other voting systems, there are no second rounds or ranking of first- and second-choice candidates, making it challenging for smaller parties to gain parliamentary seats with an increased share of the popular vote.

AXA Investment Managers' G7 economist Gabriella Dickens warned in a Friday note that the election outcome "signals a danger for the political system, as a significant portion of the vote was cast on less than a third of the popular vote."

Dickens stated that the voter turnout rate of 60% in this election was the second-lowest since 1918, after 2001, when it fell to 59.4%. This 7.6% decrease in turnout from 2019 signifies a "broader political disconnect," according to Dickens.

"The size of Labour's majority is more a result of the unique features of our electoral system and the interplay of divided votes and the SNP's collapse, rather than a surge in Labour's popularity," she stated.

Dickens stated that the "vote has shifted to the left more broadly."

If the Labour government can successfully govern for the next five years and achieve economic growth, investment, and increases in individuals' real incomes, they will be well positioned to experience a significant improvement in the future, as stated.

Pantheon Marcoeconomics' chief U.K. economist, Rob Wood, stated that investors must analyze the implications of the vote shares, right-wing Reform's results, and voters' readiness to change political affiliations on policy.

Despite winning 14% of the popular vote, Reform UK party secured only four seats.

According to Wood, a majority as large as Labour's typically ensures more than one term as government. However, Mr. Starmer's majority is not as secure as usual due to the voting dynamics.

To show they can fulfill their pledged changes, Labour must act quickly on policy adjustments.

— CNBC's Jenni Reid and Holly Ellyatt contributed to this report.