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UK Elections 2024: Labour’s victory and its ripple effects on the fintech sector

In a sweeping victory that has reshaped the political landscape, the Labour Party, under Sir Keir Starmer, has secured a commanding majority in the 2024 UK General Election.

As the nation pivots towards a new era of economic policies and financial regulations, what will be the implications of this political shift, and what does the future hold for the fintech sector?

  • Marina Mouka
  • July 8, 2024
  • 7 minutes

The 2024 UK General Election has ushered in a new era with a decisive victory for the Labour Party, marking a significant shift in the political landscape. The Labour Party, led by Sir Keir Starmer, secured over 400 seats, achieving a landslide win and the largest majority in recent history.

This outcome reflects a shift in voter sentiment, with Labour’s promises of economic growth, clean energy, and enhanced public services resonating widely.

The Conservative Party, previously in power, experienced a dramatic loss, while smaller parties and independents also made notable gains. As Sir Keir Starmer prepares to form the new government, attention now shifts to the economic and financial implications of this political change.

With new policies on the horizon, there is much speculation about how this change will impact the economy, particularly the dynamic fintech industry.

Market reactions: a mix of optimism and caution

Initial market reactions were mixed. The financial sector, which includes fintech, is particularly sensitive to changes in government policies.

Investors are closely monitoring Labour’s plans, especially those related to regulatory reforms and tax changes. The FTSE 100 saw a slight dip of 0.5% in the days following the election, reflecting investor caution. However, sectors poised to benefit from increased public spending, such as construction and green energy, saw positive movements.

Reuters reports that while the City of London remains cautious, there is a general sense of resilience and readiness for the new regulatory environment.

Goldman Sachs upgraded the UK’s growth forecast post-election, predicting a 1.8% growth in GDP for 2025, up from an earlier forecast of 1.2%. This optimism is largely driven by expectations of increased public spending and infrastructure investment. However, these measures also come with concerns about fiscal discipline and long-term economic stability.

Labour’s economic policies are set to reshape the UK’s economic landscape significantly. With a focus on public investment, the new government aims to drive growth through infrastructure projects and increased spending on healthcare and education. These initiatives are expected to create jobs and stimulate economic growth.

However, higher taxes on businesses and the wealthy are a part of the plan. Labour’s proposal to increase corporation tax to 25% could dampen business investment in the short term. Yet, this could also lead to a more equitable distribution of wealth and improved public services, which might benefit the broader economy.

The cautious approach by the financial markets suggests that while there is some apprehension, the overall outlook remains cautiously optimistic.

Policies, regulations, and the next day

Under Labour’s government, new policies aimed at promoting innovation while ensuring consumer protection are expected. The newly-formed government plans to introduce a fintech innovation fund worth £500 million to support startups and promote research and development. This initiative aims to foster a conducive environment for fintech companies, promoting growth and technological advancements.

Labour’s manifesto also includes proposals for tighter regulation on data protection and cybersecurity, reflecting growing concerns about digital security. This could lead to increased compliance costs for fintech firms but also provide a more secure environment for consumers, enhancing trust in digital financial services. Regulatory changes are expected to address the challenges faced by fintech companies, such as ensuring data privacy, preventing fraud, and managing digital identities.

Some of the pre-election pledges of the Labour Party for the financial services sector and other headline areas include:


  • National wealth fund: The new government plans to establish a £7.3 billion National Wealth Fund aimed at creating 650,000 new jobs. This fund will focus on investments in green industries, such as rebuilding the steel industry, upgrading ports, building gigafactories, and accelerating carbon capture technologies.

Banking and Financial Regulation

  • Open banking and finance: Labour is committed to supporting the development of Open Banking and Open Finance to enhance innovation and competition within the financial sector. They plan to continue work on a Central Bank Digital Currency (CBDC) and set up a regulatory sandbox for testing financial products.
  • Consumer protection: The party aims to reinforce consumer protection by regulating the Buy Now Pay Later (BNPL) sector and implementing strategies to combat financial fraud. They also plan to explore longer-term fixed-rate mortgages and enhance financial resilience.

Climate Finance

  • Green finance: Labour intends to position the UK as a global hub for green finance by creating a comprehensive green finance regulatory framework. They aim to leverage private capital to address climate change and support the decarbonisation of homes.
  • Environmental investments: They also plan to fund their green initiatives, such as Great British Energy and Warm Homes, through a windfall tax on fossil fuel giants and borrowing within fiscal rules. This will help in achieving climate goals and fostering sustainable development.

Other Headline Commitments

  • Fiscal policies: Labour has pledged to maintain fiscal responsibility by ensuring day-to-day costs are covered by revenues and that the national debt is reduced as a share of the economy. They also emphasise the importance of economic stability and have committed to keeping mortgage rates as low as possible.
  • Innovation and fintech: The party supports the growth of fintech and aims to maintain the UK’s leadership in this sector. This includes backing initiatives like securities tokenization, AI integration in financial services, and further development of Open Finance.

By creating a robust regulatory framework, the government aims to strike a balance between innovation and consumer protection. This approach is likely to boost consumer confidence in fintech solutions, driving greater adoption of digital financial services.

According to Addleshaw Goddard, these changes could lead to a more stable and consumer-friendly financial environment, encouraging responsible lending and borrowing practices.

Smart data and digital assets

Chris Holmes from the House of Lords, in an article published by Finextra, highlighted the importance of smart data and digital assets in the fintech sector. He emphasised the need for a Smart Data Bill to provide regulatory clarity and enable the creation of a smart data economy. This includes a 5-year roadmap to extend open banking to open finance and a 10-year plan to integrate smart data across various sectors. Holmes also discussed the legal treatment of digital assets, recommending a new class for digital assets to ensure clarity and security for users.

AI regulation and national payments vision

AI regulation is another key area of focus. Holmes’ private members bill, which aimed to establish an AI authority and regulatory sandboxes, underscored the need for structured AI governance. The National Payments Vision, following the Independent Future of Payments Review, seeks to streamline the UK’s payments ecosystem and address rising fraud, ensuring a secure and efficient financial infrastructure.

Growth and innovation

The government’s focus on digital infrastructure and cybersecurity is expected to provide a solid foundation for fintech companies. This could lead to a 15% increase in the number of fintech startups in the next two years. The establishment of the fintech innovation fund is a strategic move to maintain the UK’s competitive edge in the global market.

Labour’s commitment to digital skills training and education will also play a crucial role in supporting the fintech industry.

International competitiveness

The UK’s position as a global fintech hub could be strengthened by these developments. Enhanced international partnerships, a robust regulatory framework, and Labour’s commitment to improving digital infrastructure are expected to attract more foreign investments into the UK fintech sector.

Additionally, Labour’s foreign policy and trade strategies, focused on strong trade relationships and promoting the UK’s fintech capabilities abroad, are also expected to help UK fintech companies access new markets and expand their global footprint.

Summing up…

The outcome of the 2024 UK General Election is set to bring substantial changes across the economy, with a pronounced focus on the fintech industry. While there are challenges ahead, particularly in terms of regulatory compliance and tax increases, there are also significant opportunities, especially in public spending and innovation. The coming years will be crucial in determining how the fintech sector adapts under the new government.