Labour gains

Hopes for an India-UK FTA improve

The British Labour Party’s return to power after 14 years following a victory that surpassed expectations is seen as a vote for stability after the chaotic years of Conservative rule, marked by serial scandals, a cost of living crisis, failing public services, and sluggish economic growth in the post-Brexit era. But disaggregated voting patterns in this low-turnout election suggest that despite winning 412 seats, 64 per cent of Parliament’s 650 seats, the Labour party’s popular victory is a qualified one. The party won 34 per cent of the vote, only 2 percentage points more than its poor showing in the 2019 elections. Though the Conservative party lost 250 seats, it has a 24 per cent vote share; the far-right anti-immigration Reform UK gained four seats but a 14 per cent vote share. The Liberal Democrats, which had once allied with the Conservatives, won 71 seats, 60 more than in 2019, and a 12 per cent vote share. A chunk of Labour’s gains came from Scotland, where disarray in the Scottish National Party cost it 38 seats. These numbers may explain why the stock and currency markets were neither shaken nor stirred by the landslide victory.

British Prime Minister Keir Starmer, 61, a former public prosecutor who entered Parliament in 2015 and has never served in government, appears to have understood the need for brisk progress on his party’s ambitious centre-left agenda. This includes restoring economic and social stability by raising taxes and spending more on public services — health, education, and police — renationalising British Rail as private contracts expire, ending sales of petrol and diesel cars by 2030, and closing grants of new oil exploration licences in the North Sea. Within days of the results being declared, Mr Starmer, who was knighted in 2014, made Cabinet appointments, most of them from the Shadow Cabinet, and held meetings. He has sought to set the tone of his government by declaring as “dead” the Conservative government’s plans to ship undocumented immigrants to Rwanda. Despite having voted against Brexit, he ruled out a reversal. He will make his debut on the international scene on Tuesday, flying to Washington for the North Atlantic Treaty Organization’s 75th anniversary summit. His government has pledged to continue support for Ukraine and to increase the United Kingdom’s (UK’s) military spending. He will, however, be tested on the UK’s stance on Israel’s war on Hamas; four independent pro-Palestinian candidates wrested seats from Labour in these elections, including former Labour Party leader Jeremy Corbyn.
 

India has good reason to view Labour’s victory with hope, especially on its ambitious foreign-trade agreement (FTA), which has been in the works since 2022. The Labour manifesto contained a commitment for a new strategic partnership with India. Prime Minister Narendra Modi has moved quickly to establish cordial relations with the new government, including extending an invitation to Mr Starmer to visit India. The two countries have completed 13 rounds of FTA negotiations and made substantial progress under former prime minister Rishi Sunak. Much depends on how negotiators approach the sticking points — lower duties for Scotch and electric vehicles, temporary visas for Indian service providers, and environmental standards. Foreign Secretary David Lammy aimed to have the FTA wrapped up by the end of 2024. It is to be hoped that this deadline does not suffer the same fate as the earlier “Diwali” timelines committed by the Conservatives.