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The election of a Labour government in the UK is not expected to significantly impact India-UK ties or financial markets in the short term. According to Arnab Das, Global Market Strategist at Invesco, the change in power from the right to the center-left is largely priced in and will not lead to major policy shifts.

Das notes that the UK’s economic challenges are deeply structural, and Labour is unlikely to be able to fix them quickly. He expects some symbolic tax changes, but overall stability and continuity in the near term[1]. The Bank of England is expected to cut interest rates gradually, with the market pricing in around two cuts this year, but Das cautions against expecting a sharp decline in rates.

Regarding India-UK relations, Das sees the trajectory as one of increasing alignment between India and the West, including the UK. While there may be geopolitical tensions with China, the economic integration between India and its Western partners, including the UK, is expected to continue. Overall, the change in UK government is not anticipated to significantly disrupt India-UK ties or financial markets in the short run.

The election of a Labour government in the UK is not expected to significantly impact India-UK relations or financial markets in the short term.

While the Labour Party under Jeremy Corbyn was previously perceived as antagonistic towards India, the party has reinvented itself under Keir Starmer’s leadership. Starmer has declared that Labour would seek a closer relationship with India and the British Indian community.

Negotiations for the India-UK Free Trade Agreement (FTA) hold bipartisan support and are slated to resume under a prospective Labour government. The FTA aims to double bilateral trade by 2030, benefitting sectors like textiles, apparel and gems.

A Labour government may also be better placed to make concessions on mobility-related issues, which were a sticking point for the Conservatives who advocated for Brexit on an anti-immigration platform.

Overall, while there may be some symbolic tax changes, the UK’s economic challenges are deeply structural and the Labour government is unlikely to make major policy shifts in the near term. The trajectory of increasing alignment between India and the West, including the UK, is expected to continue.

Citations:
[1] India-UK ties amid British political flux – Observer Research Foundation https://www.orfonline.org/research/india-uk-ties-amid-british-political-flux
[2] UK Elections: Mending India-Labour Relations Won’t Be Easy For Starmer https://www.ndtv.com/opinion/can-uks-new-pm-keir-starmer-fix-labours-fragile-relations-with-india-6038590
[3] UK Elections: How Keir Starmer’s 400-paar feat for Labour party will … https://economictimes.indiatimes.com/news/india/uk-elections-how-keir-starmers-400-paar-feat-for-labour-party-will-impact-india-britain-relations/articleshow/111505137.cms
[4] UK Elections 2024: Interesting crossroads for India-UK relations https://organiser.org/2024/07/05/245872/international/uk-elections-2024-interesting-crossroads-for-india-uk-relations/
[5] From India to Israel: What a Labour win in the UK means for the world https://www.firstpost.com/explainers/uk-election-result-keir-starmer-labour-foreign-policy-india-israel-gaza-russia-ukraine-13789666.html
[6] What Labour victory means for India-UK ties & markets? Arnab Das explains https://economictimes.indiatimes.com/markets/expert-view/what-would-the-labour-government-mean-for-india-uk-ties-markets-arnab-das-explains/articleshow/111503344.cms