Labour Party Faces Multiple Hurdles Ahead of UK General Election, Nomura Analysis Reveals

File image of Kier Starmer and Rishi Sunak. Image credits: UK Parliament, Number 10.

As the United Kingdom gears up for a pivotal general election expected in October/November 2024, the Labour Party, while riding high in current polls, confronts several significant challenges that could impede its path to securing an outright majority, according to a comprehensive analysis by Nomura.

The report delves into the nuanced political landscape, highlighting the Labour Party's prospects against the backdrop of a 14-year Conservative reign. "Our central scenario is for a UK election in October/ November.

The Labour Party are widely expected to take power from the Conservatives after 14 years; however, we think there is still a strong possibility it will do so without an overall majority," the document begins, setting the stage for an in-depth examination of the electoral battlefield.

Above: "Probabilities of various election outcomes illustrated with a normal distribution" - Nomura. Source: Smarkets, Eurasia, Nomura.

Among the key headwinds facing Labour, the analysis identifies three primary areas of concern:

Historical Trend of Losing Support: Labour traditionally faces a decline in support as the election approaches. "Labour has almost always lost support one year out from an election," the report states, underscoring a pattern that has historically seen the party's polling advantage narrow in the critical final months leading to the election.

Impact of Seat Boundary Changes: The upcoming election will be the first under new constituency boundaries since 2010, which are anticipated to favor the Conservatives. "Redistricting... will be disadvantageous to Labour, though it should only be a game-changer in the event of a close election," the analysis predicts. This structural shift could alter the electoral map in ways that complicate Labour's quest for a majority.

Scrutiny of Labour's Policies: As the election draws nearer, Labour's policy platform is likely to come under increased examination.

"Labour’s policies are yet to face intense scrutiny," Nomura points out, suggesting that the party's policy positions, including its stance on immigration and a £28bn climate fund pledge, may pose electoral hurdles. "Immigration is rising in importance in voters’ minds... This is potentially a challenge for Labour because the Conservatives are seen as tougher on immigration," the report highlights, pinpointing a critical issue area where Labour's approach could impact its electoral fortunes.

Above: Immigration rising in importance, but economy on top

Moreover, the analysis touches on the broader strategic landscape, noting, "2024 is very likely to be the year when the UK moves from a Conservative government of 14 years to a Labour one, according to current polls."

However, it cautions that "a Labour majority is the most likely outcome, but only marginally so," assigning a probability of ~65% to such a scenario while also entertaining the possibility of a hung parliament.

Labour's journey to the next general election is fraught with obstacles, from historical precedents and structural electoral challenges to the looming crucible of policy scrutiny.

As Nomura's report meticulously outlines, while the winds of change seem to favour Labour, the party's ability to navigate these challenges will be critical in determining whether it can convert its current polling lead into a governing majority.