The Year Ahead in Elections Outside America

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Fisher Investments

Editors’ Note: MarketMinder favors no party nor any candidate. We assess political developments for their potential economic and market impact only.

Beyond America’s election, the world is dotted with races next year, including one of the most consequential elections of all time, pitting Vladimir Putin against Vladimir Putin and maybe Vladimir Putin in the race for the Kremlin. Kidding! But Russia’s “vote” isn’t the only one outside the US—and the rest aren’t open-and-shut cases. Here are some of the political calendar’s highlights. As they pass, it should help uncertainty fall and, in many cases, extend bullish global gridlock.

First Up in Europe: Portugal.

Portugal votes March 10. The campaign kicked off last month, after a corruption investigation brought down Prime Minister António Costa of the center-left Socialist Party (PS). Leading the party in his place is Pedro Nuno Santos, a former infrastructure minister who had his own brush with scandal a year ago and mostly represents the status quo on the policy front, despite his left-wing reputation. His chief competition is the center-right Social Democratic Party (PSD), led by Luis Montenegro, which is campaigning on tax cuts, expanded social services and state pension increases. The two are polling neck and neck at 27% each, with the right-wing populist Chega at 16%.^[ii] Montenegro has thus far ruled out forming a coalition with the latter, so with the likelihood of either main party winning an absolute majority quite low, gridlock and an extended government formation timeline looks likely.

This is the sort of outcome that annoys voters (see the frustrations over slow-motion coalition talks in Holland for another example), but for stocks, it is a benefit. When a government can’t pass much, it means legislation has a lower likelihood of creating winners and losers, which helps enable risk taking and lets markets move on. Just as Costa’s former administration didn’t undo the mid-2010s’ debt crisis-era labor reforms as so many feared he would at the outset, the next government probably won’t be able to rock the boat much.

Britain’s Uncertain Timing

On paper, the next UK election isn’t due until January 2025. But Prime Minister Rishi Sunak has pledged to hold the vote in 2024, and there are rumblings that the Spring Budget, scheduled for March 6, could launch a springtime contest. Sunak has long signaled he plans to announce tax cuts before the vote, and some analysts say announcing them in March could tee up a vote in May, before the sugar high wears off. Others speculate Sunak could wait until the autumn, on the notion passing the cuts and giving voters a few months with some extra pounds in their pocket constitutes a better strategy.

Either way, he and his Conservative Party have their work cut out for them. Labour, led by Keir Starmer, is polling at 43%, light years ahead of the Conservatives’ 25%.^[iii] Complicating matters for the latter, the more traditionally conservative Reform Party is at 9% and gaining, fueling fears that it will siphon more grassroots support.^[iv] In a system with proportional representation, this wouldn’t be much of an issue, as it would simply add another party to the coalition forming mix. But Britain holds a first-past-the-post horserace for each constituency, with the candidate who wins a plurality taking the seat. So Reform’s ascent could make an outright Labour government even more likely by splitting the conservative vote.