By the end of 2024, countries representing over 50% of the earth’s population – and nearly two-thirds of global GDP – will have cast their vote on governments, presidents, and prime ministers. How will economies and markets react, and how can investors ready their portfolios?

To answer these questions, we went back to the data. We’ve assessed thousands of data points from previous years’ elections and asked our investment experts to cast their minds, and their models, to the future.

This election hub is the forum for our latest thinking on unfolding themes during a year which has already seen several shake-ups. Read, watch and listen to our insights on key topics, such as if the party in power influences levels of inflation, or why stock markets appear sanguine in the face of voter populism.

Who’s having their say?

Does how you vote influence the level of inflation?

In a particularly divisive political climate, there is a lot of rhetoric about the fiscal largesse and inflationary policies of left-leaning and liberal parties. But does the data stack up? To find out, we compared presidential elections in the US to general elections in the UK.

Let's start with the data on who has been in power in the US and the UK and for how long.

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Return of the macro

What has caused the relationship between party and inflation to weaken over time? After all, fiscal policies should differ from party to party and have consequent macroeconomic effects. One party’s ‘tax and spend’ will have different inflationary outcomes than another’s ‘tax cuts for all’. One possible clue is the closer relationship between the overall inflation rates of the US and the UK.

The charts below show the relationship between rolling monthly prints of US and UK core price inflation (CPI), measured year on year. Inflation is increasingly correlated from the middle half of the 20th century – and likely beyond the influence of any one political party. In other words, this is macro with a capital M.

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There is no single explanation for this: it may be that increasingly globalised and interlinked supply and production chains have subjected major economies to similar pressures. In the 1980s, when the correlation peaks, global events such as the oil-price crisis caused inflation to peak around the world. The trend may also reflect increasingly synchronised monetary policy across key central banks towards the end of the 20th century.

Although it remains strong, the relationship has weakened slightly in the years since the global financial crisis. We can speculate that this may represent ‘de-globalisation’ and onshoring of supply chains, a theme which will hang in the balance during November’s US election.

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