Tory election victory also a win for investors, say analysts

Investors have come out in support of the Conservative Party’s general election victory late last week, saying the stability of a majority government will be good news for investment.

The warm welcome for a Tory-led government was echoed by the UK’s largest utility Centrica due to “the certainty and continuity” the outcome brings to the sector.

“Our immediate plan is to engage with the new government on the functioning of the energy market which is already being investigated by the Competition and Markets Authority,” said Centrica chief executive Iain Conn.

Eclipse Energy analyst Glenn Rickson said the election result would prove to be “good news” for energy investors, because the outcome offers the best chance of a continuity of previous government policy and stability relative to the protracted coalition debates which marked the previous government.

But a notable exception to this is the Conservative’s pledge to cut support for onshore wind and offer the public a referendum on the UK’s EU membership, Rickson added.

“[I]nvestor confidence may be fragile at best in the medium term, particularly as so much of the UK’s energy policy framework is now determined not in Westminster but in Brussels,” Rickson said.

Centrica’s share price bounced almost 8 per cent higher while SSE shares climbed over 5 per cent on Friday morning as the election results emerged to show a Conservative majority of 331 seats.

Investors at Citigroup said the election result is a “benign outcome” for the industry “as the threat of arbitrary regulation and tariff setting, which was a high probability under Labour’s manifesto, has diminished”.

The industry came under heavy political pressure after former energy secretary Miliband proposed a raft of energy industry interventions eighteen months ago, which shadow minister Caroline Flint vowed would overrule the findings of the ongoing Competition and Market Authority probe.

Labour secured just 232 seats while the Scottish National Party took 56 and the Liberal Democrats slumped to just 8 seats.