Early UK election unlikely to affect the near-term outlook

UK prime minister Rishi Sunak has announced that a general election will take place on July 4. While there are likely to be some differences in manifesto tax and spending pledges, the poor fiscal inheritance and apparent reluctance of either party to materially alter the flawed fiscal rules suggest the election outcome is unlikely to significantly affect the near-term outlook.

What you will learn:

• CPI inflation slowed in April, but a disappointingly small fall in services inflation has almost certainly killed the chances of a June rate cut. We now expect two 25bps cuts this year, in August and November. But a third cut remains possible if pay and inflation data soften more quickly than anticipated or an incoming Labour government opts to front-load fiscal tightening.