How the general election result will affect your holiday spending money and the value of your pension

Economists have forecast just what might happen to the value of the pound and stock markets, depending on which party clinches victory

ByGraham Hiscott

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The cost of your summer break abroad could be impacted by the election result (Photo: Getty Images Europe)

The outcome of the general election could impact everything from your pension to your holiday spending money this summer.
The City is poised to react to the outcome, with many traders working through the night as the results come in.
The earliest reaction will come from the value of the pound against other currencies.

The election result could mean Brits have more, or less, to spend this summer abroad (Photo: Getty Images)

Sterling has already tumbled from $1.50 against the dollar before last June's Brexit vote.
It's now around $1.29 but is likely to rise - or fall - depending on the outcome of the election.
Sterling jumped 1.5% immediately after the Tories won the election in 1992, and by 2% in 2015.
Economist Samuel Tombs reckons a Conservative landslide victory this time around will see sterling edge past $1.30.
The small increase, especially if the pound strengthens against the euro too, will boost the spending money of Brits holidaying abroad.
That would come as a timely relief for millions preparing for their sunshine breaks.
The weak pound since last year has pushed up the cost of a beer in the sun and meals overseas.
It would also, the longer the pound keeps rising, begin the soften the blow of higher import prices.
Sterling's weakness has pushed up the cost of goods we buy from abroad - one big reason inflation has jumped to 2.7%.
But not everyone is unhappy about the pound's plunge.
UK companies selling their goods overseas have been given a boost, as it makes their products cheaper. A stronger pound will have the opposite affect.

A big Tory majority could trigger a rise in the pound but a small victory could lead to a fall (Photo: Getty Images Europe)

Economists are divided on how the pound will react to other election outcomes.
Mr Tombs, from Pantheon Macroeconomics, thinks a minority Tory government would “hit sterling hardest.”
He reckons a surprise Labour victory would boost sterling “due to the party’s softer Brexit stance.”
He said: "We think that sterling would jump to $1.32 overnight and that it would appreciate further over the following months as a soft Brexit became the most likely outcome."

A Labour coalition led by Jeremy Corbyn could see sterling rise (Photo: AFP)

The chance of a Labour-led coalition could also result in the pound rising, he said.
Others are less sure.
Tom Stevenson, investment director for personal investing at Fidelity International, thinks the pound would fall after a Labour victory.
This could lead to an initial jump in the FTSE 100.
But Mr Stevenson cautioned: “The implementation of the most radically socialist agenda since Michael Foot’s 1983 ‘suicide note’ would explicitly target corporate earnings and is likely to lead to a severe market correction.”
He added: “The key to understanding the impact of the election will be the pound.”

Share price fluctuations have a impact on pension funds on which millions of people depend (Photo: Getty)

All eyes will also be on how stock markets react.
The FTSE 100 has risen more than 350 points since April 18th, when Theresa May announced the snap election.
That is equivalent to £90billion being added to the value of the 100 companies on it.
The increase has been largely driven by the fall in the pound since last June’s Brexit vote, plus events abroad.
In contrast, polls for the election seems to have had little impact.
Laith Khalaf, a senior analyst at broker Hargreaves Lansdown, said: “It’s probably that the markets are deciding not to trust the polls any more.
“It is also a reflection that the markets expected the status quo - a Tory government - to remain, although you can quibble about the strength of that.”
However, Mr Khalaf reckons a Labour victory - or a hung parliament - would not result in stock markets tumbling.
“I think you would see a market reaction that would be negative, with share prices in UK focused companies falling the most,” he said.
“But I think a lot of that will be offset by a fall in the pound which, in turn, will put upward pressure on the shares of companies with big overseas earnings.”

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