FTSE 100 closed in red before Sunak confirmed 4 July election

London’s blue-chip index ended Wednesday 46 points lower, at 8,370, as the City of London awaited confirmation that Prime Minister Rishi Sunak is to call a summer general election.

By late afternoon, reports from outlets including the BBC gathered momentum that Sunak will be calling a General Election, likely on July 4, according to the BBC and other UK media outlets.

Sunak confirmed the reports with a press conference outside number 10 Downing Street, in which he said “now is the moment for Britain to choose its future.”

An election on 4 July will mean that the British public will be summoned to the polls in the middle of England’s Euro 2024 campaign.

Sunak is expected to formally ask the King to dissolve parliament later on Wednesday, and, a parliamentary recess due next week is widely expected to be cancelled as ministers force through remaining legislation, before parliament is dissolved.

Economics will be central to both Conservative and Labour campaigning in the run-up to the election, amidst a backdrop of sluggish growth and uncertainty over interest rates, inflation and the cost of living.

Labour are big favourite with bookies

British bookie BetVictor makes Labour’s Keir Starmer a 1/10 favourite to take power with a majority in the election, whilst it prices the Conservative party at 9/1.

“Rishi Sunak’s snap election announcement outside Downing Street today will have done little to unsettle the betting for who will be in charge of the country at the end of the year, with Labour remaining our overwhelming favourites for a long-awaited return to power,” BetVictor spokesperson Sam Boswell said.

Others, meanwhile, had more a detailed analytical response.

‘’Although some of the more severe headwinds have eased, the Conservatives will go into this election facing an electorate still struggling with the cost-of-living,” said Hargreaves Lansdown head of markets Susannah Streeter.

Economic uncertainties

“Inflation has come down towards target, but it has disappointingly missed forecasts, which means prospects for an interest rate cut have been pushed further into the distance.

“House prices have started creeping up again, amid supply shortages in key parts of the country, which means that getting onto the ladder is still unaffordable for many young people.

“This is while others face the daunting prospect of remortgaging on much higher rates and tenants are watching rents climb at super painful rates.”

Streeter added: “The latest public sector borrowing snapshot arguably offers the government even less wiggle room to bestow treats on voters.

“Borrowing in April totalled £20.5 billion, above the forecast of the Office for Budget Responsibility and overall borrowing for the year was revised upwards.

“It seems further tax cuts would come at the expense of public services.”