Xbox prices rise as Harrod's hit by cyber attack and Reform claims big election win

Scotsman

02-05-2025

Reform gaining ground could lead to volatility and shift in economic consensus in longer term - opinion
Reform UK's solid showing in the local elections, and its narrow by-election win in Runcorn and Helsby, marks a continuation of a trend many had predicted: growing public support for the party as disillusionment with the political status quo deepens.
Assume, for a moment, that Reform can sustain this momentum and begin shaping policy in a meaningful way. What might that mean for the UK economy? While the outcome is impossible to predict, we can make a few informed guesses. If Reform continues to grow in influence, it could destabilise the long-standing two-party model. Some voters may welcome that shift, but markets tend to view political fragmentation with caution. Greater uncertainty, especially around general elections and legislative priorities, could lead to increased volatility.
The party's platform includes tougher immigration controls and a focus on deregulation. If mainstream parties adopt these positions to stem losses, it could impact the labour market, particularly in sectors like health, hospitality, logistics and agriculture, which rely heavily on overseas workers. Wage inflation could follow, even as some businesses benefit from looser red tape.
Reform's rise could also pull the Conservatives further toward populist economic policies, including lower taxation, trade protectionism and reduced commitment to net zero. That would have implications for investment, especially in sectors aligned with green growth, ESG goals or EU-facing trade.
Nigel Farage remains a polarising figure internationally. For some investors, a stronger Reform presence might trigger caution, delaying decisions until there's clarity around policy direction on regulation, trade and climate commitments.
Then there's the broader political impact: if the main parties feel pressure from Reform, they may shy away from bold economic reforms, particularly those involving tax, green investment, or public service restructuring, for fear of alienating voters.
Reform's breakthrough in Runcorn and Helsby may also trigger internal unease within Labour ranks, particularly as it follows a broader pattern of frustration among voters in traditionally safe seats. While one result doesn't undo Labour's national lead, it could prompt questions about Sir Keir Starmer's ability to connect with working-class and disaffected voters - the very groups Reform is targeting. If leadership doubts begin to simmer, Labour risks losing focus on its policy agenda, including key proposals affecting business confidence, investment and economic reform.
Of course, local and by-election results often serve as protest votes. But if Reform continues to gain ground, its worldview could begin to reshape, or even unravel, decades of relative economic consensus.