“We lost an election; nobody died” – so said Sir Jacob Rees-Mogg in a radio interview the day after the Tories lost the election and he himself lost his seat. The scale of the Tory implosion was indeed considerable: dropping 251 constituencies and seeing an 80-seat majority in 2019 turned over to a Labour majority of 172 was quite some accomplishment. But it could have been much worse for them: if, as some had been predicting (including former cabinet ministers and the pollster Electoral Calculus), the Tories had been reduced to third place in Westminster behind the Liberal Democrats (or, albeit far-fetched, fourth behind Reform), they would not even be able to lead the Opposition in parliament, let alone govern.


The significance is important: it confers official status. In such a position the Leader of the Opposition sits on the Opposition front bench immediately opposite the Prime Minister and is always called upon first to reply on behalf of the Opposition in response to the Government while other Opposition members receive less airtime. His/her party officially forms the Shadow Cabinet, members facing off directly against government ministers and having the status of official Shadow spokesmen. Also, crucially, the party which leads the Opposition has a much greater chance of chairing key parliamentary select committees which, outside the weekly rowdy ‘ya-boo’ theatre of Prime Minister’s Questions, are where the government is really held to account.

Good government requires effective challenge

Whether one is a Conservative or not is beside the point. Effective opposition is important to good government and governance in our adversarial parliamentary system. It is especially important when the government has a significant majority. The makeup of the new parliament is completely dominated by left of centre political thinking both on social and economic policy: of the 650 seats, Labour has 410 and the LibDems 72; add the SNP, Greens, Plaid, the national parties in Northern Ireland (excluding Sinn Féin who do not take their seats) and the independents, brings the left-leaning vote to 502 seats, at 77% a heavily skewed political bias. At 23% the centre-right comprising the Conservatives, Reform and the Unionist parties in Ulster, is far out-gunned; for some semblance of proportion, Tory leadership of the Opposition at least means an alternative view is regularly aired.


After six weeks of campaigning, we’re all virtually done to death talking about the election. Nevertheless, it is just worth pointing out that while Labour is undoubtedly in the driving seat for the next five years with its very big majority, its mandate is remarkably shallow. In the overall share of the national vote, Labour’s barely shifted, only increasing 1.6pts from 2019 (when they lost heavily); it was 6.8pts lower than 2017 (when they lost again but not so badly). Critically, only 20% of the electorate actually voted for Labour. Turnout was 60%; the 40% who failed to vote have no cause for complaint about the outcome. But that doesn’t get away from the fact that fully 80% of the registered electorate did not vote Labour; that they ended up with such a majority is one of the quirks of our ‘first-past-the-post’ constituency system when turnout is low and the opposition vote is splintered. It is nothing less than the truth that it was far less a case of Labour winning the 2024 election as the Conservatives spectacularly losing it.

Bored? Cynical? Disillusioned? ‘We get the government we deserve’

In a cynical, soundbite world, it is a considerable challenge to all political parties to rebuild trust in politics, especially after the self-inflicted bashing of the past five years. They must reconnect with the electorate and get as many participating in the election process again as possible; it is a rule of political life that the more indolent or complacent the electorate, the more likely the system is to be exploited for their own ends by highly engaged and motivated groups who tend to be towards the political poles. As the saying goes, regardless of who wins, “we get the government we deserve”.

Nub of the Tory quandary: what defines Conservatism in the early-mid 21st Century?

A prerequisite of being an effective opposition is for said Opposition to have a leader. Rishi Sunak remains Conservative leader pro-tem until his successor is elected. Amid much finger-pointing about the system and who was to blame for the string of leadership choice failures (i.e. the membership or the parliamentary party), the first step for the Tory party is to agree unequivocally who will be its electoral college.


No doubt it will undergo a period of mourning, introspection and probable bloodletting as it conducts its internal post-mortem on the election defeat. But it is destined to remain in the wilderness unless and until it reconnects with its core constituency; as the Tories have drifted to the centre left and social democracy, a process begun by John Major and continued by David Cameron and Teresa May, despite electoral wins the infighting and tension have only increased, notably as the right wing of the party has felt increasingly ostracised and belittled (remember David Cameron’s ‘swivel-eyed loon’ Brexiteers?). The first real, seismic, manifestation of significant dissatisfaction was the Brexit vote.


Despite 14 years in government recently, three factors have dominated (more accurately dogged) the modern Conservative party for over thirty years: identity and what defines a Conservative, encapsulated in the canyon-wide divide between the paternalistic One-Nation Tories (i.e. in old parlance, the Wets) and the more spiky, reactionary Thatcherite ‘Dry’s’ who believe in the supremacy and rights of the individual over the state (all social and economic policy is driven by the answer); second, Europe; finally, immigration. On the centre right, from their own bases, Boris Johnson in the Conservative Party and Nigel Farage in UKIP, were the first to recognise in the early years of this century that the traditional UK caucuses were turning upside down, beginning to mimic what was happening in the US: for want of better phrases, in terms of political outlook the former conservative Establishment was moving left of centre while the traditional (especially white) working class vote was moving right. Both Johnson and Farage exploited it successfully, though Boris was temperamentally incapable of delivering the follow-through.


What the Tories must figure is where now to position themselves. It may take several attempts (as after the 1997 election defeat) to work it out. If they are decisive and clear-headed under a single-minded new leader, perhaps they can emulate what Starmer has done over the duration of a single parliament with the Labour Party since its flirtation with Jeremy Corbyn. Two things are clear and connected: first, the Conservatives cannot ignore their traditional base; second, they must brook a conversation with Nigel Farage.

The Farage Conundrum

We have said it more than once in these columns about Nigel Farage but it bears repeating: love him or loathe him, populist hero or destructive hooligan, he has been the single most powerful force in British politics since 1990; no political opponent should ever underestimate him. Neither UKIP previously nor Reform today was ever a potential party of government; but UKIP was the catalyst for Brexit and at this election as a movement its Reform successor has just garnered 4.1 million votes, 14.3% of the total, nationwide six hundred thousand more than the Liberals (it polled third in England and nearly pipped the Tories in Wales to come second; it comfortably beat Plaid Cymru). Farage knows he is on a roll. Already fighting the next election, he is explicitly targeting Labour in 2029. But the first-past-the-post system is weighted against him. The Tories need his votes and he needs their seats; is there a deal to be done? Time will tell.

Labour up and running

Meanwhile, Labour is already out of the traps. With the election out of the way and no great surprises in the choice of cabinet ministers, investors’ attention now turns to the new government’s economic plans. The mantra is ‘growth’: the questions are how in practice to achieve it, how long will it take, at what cost the investment to stimulate it and who will pay? Ahead of the first Budget, whenever it might be, even the Keynesian-leaning Institute for Fiscal Studies is struggling to make Labour’s economic sums add up. Much of the emphasis is going to be on construction: new Chancellor Rachel Reeves has already announced the reintroduction of mandatory house building targets to achieve the target of 1.5 million new homes over the new parliament; it will be joined by infrastructure projects including new technology giga-plants, battery factories, wind and solar industrial developments and other strategic energy-related projects. The speculation is that under her own brand of economic theory, labelled ‘Securonomics’, Reeves will be seeking an additional £15bn of tax revenue to try and bridge the gap between income and expenditure; she needs as far as possible not to add to the debt on the government balance sheet which would only raise the likelihood of a stand-off with the bond markets.

Un petit peu de mal de mer

Meanwhile in France, President Macron’s snap mid-term parliamentary election has the whiff of a Pyrrhic Victory. Success was a concerted effort to prevent Marine Le Pen’s National Rally party forming a government (she was pushed unexpectedly into third place in stage two of the election process). Success was only achieved by an unlikely, cobbled-together alliance of centre left and far left-wingers, most of whom viscerally loathe each other, whose only common ground in a month of campaigning was to see off National Rally (NR). For Macron, his failure is the likelihood of handing the balance of parliamentary power to the Marxist left and most probably leaving himself as a lame duck president.


Bond market investors breathed a sigh of relief about NR losing (its intended fiscal plans set alarm bells clanging in Brussels). However, depending on the outcome of the political horse trading in Paris to form a government and its ability then to push through policies, the outlook remains uncertain: the far left’s economic policies are just as alarming to Brussels and the bond markets as those of the far right; if prosecuted they would most likely cause investors to seek a ‘risk premium’ for lending to the French government. On the other hand, if France’s governing system becomes paralysed, little will be done to help overcome economic stagnation or reduce France’s very overstretched government finances. And you think we had problems?


The Jupiter Merlin Portfolios are long-term investments; they are certainly not immune from market volatility, but they are expected to be less volatile over time, commensurate with the risk tolerance of each.  With liquidity uppermost in our mind, we seek to invest in funds run by experienced managers with a blend of styles but who share our core philosophy of trying to capture good performance in buoyant markets while minimising as far as possible the risk of losses in more challenging conditions.


The value of active minds – independent thinking

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Fund specific risks

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