Barclays CEO: Difference in Labour and Conservative economic policies is "not significant"

• A General Election is scheduled to take place in the U.K. this year, with recent polls indicating a likely Labour victory, ending the fourteen-year Conservative reign.
• This week in Davos, Rachel Reeves, Labour's Shadow Finance Minister, has been advocating for foreign investment in the UK through her speeches at the World Economic Forum.

The CEO of a company stated that political risk in the U.K. is currently low due to the minimal difference between the ruling Conservative Party and main opposition Labour on economic policy, as he said on Thursday.

A General Election is scheduled to take place in the U.K. this year, with recent polls indicating a likely Labour victory, ending the fourteen-year Conservative reign.

In the two years since Keir Starmer became Labour leader in April 2020, the party has undergone a dramatic transformation from a hard-left platform that suffered a devastating election loss in 2019 to a centrist, pro-business alternative to Rishi Sunak's Conservative government.

This week, Rachel Reeves, Labour's Shadow Finance Minister, has been presenting the party's stance on foreign investment in the UK at the World Economic Forum in Davos, Switzerland.

On Wednesday, she informed CNBC that the party's main objective was to enhance living standards through economic growth, rather than imposing higher taxes on businesses or high-income earners.

Venkatakrishnan stated on CNBC at WEF that he believes the political risk in the U.K. is currently lower than it has ever been.

The upcoming election will not be a repeat of the 1970s conflict between Margaret Thatcher and James Callaghan, as their economic policies are not significantly different, as both leaders have acknowledged.

The "five-point plan for growth" proposed by Labour includes measures such as introducing a new fiscal lock to stabilize the economy, implementing mass reforms to planning laws to construct 1.5 million new homes, and developing a new industrial strategy to attract investment in various sectors including life sciences, digital, creative, financial, clean power, and automotive industries.

Although the U.K.'s economy is sluggish and inflation is still at 4%, Barclays boss is optimistic about the British economy and believes the U.K. consumer is in good shape.

The speaker stated that the pent-up savings have been diminishing due to the floating rate mortgage market and the frequent mortgage adjustments. However, the average term of a fixed rate mortgage is three years, and the rising rates have affected the market. Energy prices have decreased, and the two factors that negatively impact the budget are now subsiding. The speaker expressed optimism about the U.K.

While growth may not be exceptional, it is still acceptable. Although it is not as powerful as the United States, the U.K. has numerous institutional benefits and is a hub for innovation and technology.

Despite flatlining in the previous three months, the U.K.'s gross domestic product decreased by 0.1% between July and September. However, this decline was less severe than anticipated by many forecasters, given the recent increase in interest rates over the past two years.

In February, the next round of quarterly data will reveal if the economy has entered a technical recession, which is characterized by two consecutive quarters of GDP contraction.