Executive Summary

• Russian Invasion of Ukraine: All major parties support Ukraine against Russia. The Conservatives emphasise military aid and reinforcing NATO allies. Labour is committed to ongoing military aid and security cooperation. The Liberal Democrats call for tougher sanctions and reduced Russian oil and gas dependency.

• Israel-Hamas Conflict: The Conservative Party supports Israel's right to self-defence, while Labour calls for a humanitarian ceasefire and backs a Palestinian state. The Liberal Democrats advocate for an immediate ceasefire and recognise Palestine, gaining support from British Muslims.

• Defence Capabilities: The Conservatives aim to raise defence spending to 2.5% of GDP by 2030, focusing on modernising the military. Labour supports similar spending increases with a strategic defence review. The Liberal Democrats also support increased spending, opposing cuts to the Army and maintaining the nuclear deterrent.

• UK-EU Relations: The Conservatives emphasise moving past Brexit, highlighting trade deals outside the EU. Labour aims to reduce trade barriers and strengthen military and economic ties without reopening Brexit debates. The Liberal Democrats are the most pro-EU, advocating for rejoining the EU and participating in EU programs.

• Energy Security: The Conservatives support a balanced approach, combining clean energy with exploiting fossil fuel reserves. Labour's Green Prosperity Plan focuses on renewable energy investments through Great British Energy. The Liberal Democrats emphasise renewable investment through incentives and industrial strategy.

• Potential Outcomes and Risks for Businesses: A Labour victory may lead to increased short-term disruptions and costs due to investments in green energy and changes in trade regulations. A Labour-Liberal Democrat coalition would focus on renewable energy and fiscal responsibility, presenting both opportunities and potential short-term disruptions.

The 2024 UK General Election is pivotal for the nation's foreign and security policies. Key issues such as major conflicts, the UK’s defence capabilities and UK-EU relations dominate the political landscape. These topics influence voter sentiments and have significant implications for businesses operating within the UK. As parties lay out their strategies and positions, understanding the potential outcomes and risks for businesses is crucial for navigating the uncertainties ahead.

Key Issues

Russian Invasion of Ukraine

Over the last three years, the UK's political landscape has been significantly shaped by the support of Ukraine against Russia, a major concern for all political parties. The invasion of Ukraine, the largest since the Second World War, is not just a historical event but a pressing issue that could significantly influence the UK General Election 2024. Some have posited that this invasion is just the beginning of Russia’s ambitions in Eastern Europe and Globally, as they may seek to regain old territories in Europe.

In response to the Russian invasion, the Conservative government took a firm stand, sending military aid and providing diplomatic support to Ukraine, a point they have highlighted on the campaign trail. The Conservatives also underline the UK’s role in reinforcing NATO allies on Russia’s border, the Baltic states, Poland, and Finland. If the Conservatives are reelected, they will stress their continued support for the Ukrainian cause against Russia.

The Labour Party also supports Ukraine, stating they would be fully committed to continuing military aid and long-term security cooperation with Ukraine to stop and reverse Russian aggression. Past actions have included Labour supporting the Conservatives’ increase in military aid, which Keir Starmer assured President Zelensky, showcasing the UK’s resolve. Similarly, the Liberal Democrats stand firm with Ukraine, condemning Russia’s invasion and supporting the provision of weapons and intelligence while calling for tougher sanctions and reducing the UK’s dependence on Russian oil and gas.

The Israel-Hamas Conflict

In late 2023, Israel was attacked by the terrorist organisation Hamas, killing over 1,000 people. In response, Israel launched an invasion of the Gaza Strip, intending to wipe out Hamas. The conflict has become one of the most violent in recent memory and has led to accusations of genocide by the international community.

In response, the Conservative Party have maintained their position that Israel has the right to defend itself. The Party has continued to resist calls for a ceasefire, though this has caused a split in the party.  The Labour Party initially called for a “sustainable ceasefire” but drew criticism and even saw some shadow ministers resign in protest. Now, Labour is calling for an immediate humanitarian ceasefire and even has voiced support for the establishment of a Palestinian state.

Both the Conservative and Labour stance on Israel-Gaza has reduced trust in their policies amongst British Muslims. 62% of Muslims said that their view of the Conservative Party is unfavourable, while the figure is 43% for the Labour Party. In contrast, the Liberal Democrats have supported popular positions, both calling for an “immediate bilateral ceasefire” and even tabling a Private Member’s Bill on the UK’s recognition of a Palestinian State.

Defence Capabilities

In the face of a more dangerous world that could become more dangerous, the UK’s defence capabilities have come into sharp focus. The UK has a proud history of a strong military, but one that has been viewed as diminished in the current moment. Resharpening the sword of Britain is a key issue for the UK in 2024 and beyond.

The Conservatives continue to promote the UK’s strength as one of the key members of the NATO alliance. To strengthen the UK’s position, the Tories have committed to raising defence spending to 2.5% of GDP by 2030, surpassing the NATO standard of 2%. Key spending priorities centre around the Royal Navy’s shipbuilding program and maintenance, modernising the Army’s armoured units and capabilities, and investing in unmanned systems and the Future Combat Air programme. Further, the Conservatives want to improve the homeland defence against missile/drone threats and bolster the UK’s air defence capabilities.

The Labour Party has supported spending 2.5% of GDP on defence to modernise the military; some of this would also be spent on shipbuilding. Labour supports the renewal of the Trident nuclear deterrent and maintaining a continuous at-sea deterrence. The Labour Party supports improving military recruitment/retention and reforming defence procurement to boost capabilities. An incoming Labour Government would seek to undertake a strategic defence review to assess gaps and meet future needs.

Finally, the Liberal Democrats support 2.5% of GDP ambitions. The Party opposes the Conservatives' cuts to the Army, seeking to reverse them and increase its size to 100,000. Further, the Liberal Democrats support maintaining the UK’s nuclear deterrent while pushing for global multilateral disarmament treaties.

UK-EU Relations

The EU remains one of the UK’s most crucial trading partners, and security relations, primarily through NATO, are key to protecting half a billion people’s lives. How the UK strengthens ties is a key issue for each party and has deep implications for the future of Europe.

The Conservative Party's messaging seems to be about moving past Brexit. The Party seeks to move the conversation around relations with the EU away from Brexit tensions and highlight the importance of good relations with the bloc. The Tories centre their messaging around the benefits of Brexit, regarding sovereignty and an independent trade policy that focuses on trade deals elsewhere in the world rather than with the EU.

The Labour Party takes a different viewpoint on the EU. Like the Conservatives, Labour has ruled out rejoining the EU single market or customs union. Rather, the party would strengthen ties by seeking to reduce trade barriers and general friction, as the EU and UK are large trading partners. Further, Labour seeks to pursue a new “geopolitical partnership” with the EU centred around military, economic, climate, cyber and energy security issues. With this, Labour is conscious of not making relations with the EU too big of an issue and avoiding reopening any divisive Brexit debates that could alienate voters.

Finally, the Liberal Democrats are the most pro-EU party, having always unabashedly supported the remaining cause and even seeking to rejoin as part of a four-stage plan to deepen ties with Europe. Further, the Lib Dems support UK participation in programmes like Erasmus and a new EU security pact.

Energy Security

The general public is concerned about how parties tackle climate change. However, many of these debates are being framed through the lens of costs passed to consumers by a lack of investment and energy security.

The Conservative Party, while in government, has pushed back net-zero targets, taking a less revolutionary approach to shaking up the energy landscape. The Tories support clean energy to achieve security and cut prices. Still, it is only in combination with exploiting the UK’s fossil fuel reserves to ensure lower costs. Further, the Tories want to see an expansion of civil nuclear capabilities and support some public investment in these capabilities.

The Labour Party desires to invest in greener technologies and strengthen the UK’s energy security. The Party has laid out their Green Prosperity Plan to make the United Kingdom a “clean energy superpower ", primarily by investing in scaling up renewable industries and strengthening their supply chains. The principal vehicle the Labour Party envisions doing this through is their proposed company, “Great British Energy”. Great British Energy will aim to drive investment toward high energy-yielding technology such as offshore wind and nuclear energy. To fund this, the Labour Party plans to levy a windfall tax on the excess profits from oil and gas companies.

The Liberal Democrats also heavily focus on renewable investment but primarily aim to use incentives and remove restrictions to drive investment, building an industrial strategy around the issue.

Potential Outcomes and Risks for Businesses

The 2024 UK General Election brings potential business risks if Labour wins outright or has to form a coalition with the Liberal Democrats.

Labour Victory

A Labour victory could impact energy security and costs. Labour’s Green Prosperity Plan aims to lead in clean energy through renewable investments and creating Great British Energy. While beneficial in the long term, businesses might face short-term disruptions and increased costs, especially with a proposed windfall tax on oil and gas companies. Similarly, organising the energy system around Great British Energy will bring growing pains and disruptions.

Labour's goal to reduce EU trade barriers in the regulatory environment could streamline regulations and ease cross-border trade. However, some companies may have already adjusted to the post-Brexit realities and have operated under four years of UK policymaking untethered by EU restrictions. Adjusting to new regulations to align with the EU could impose additional costs and administrative burdens if a Labour government pursues greater alignment.

Labour's commitment to modernising the military and increasing spending might boost the defence and security industry. However, businesses not aligned with defence could face budget reallocations from government departments or reduced government contracts and, by extension, public funding. Furthermore, it is unclear if a type of national service (both military and civilian-focused) will become a Labour policy, which could potentially reduce the workforce for some industries.

Labour and Liberal Democrat Coalition

A Labour and Liberal Democrat coalition would likely focus on improving EU relations and trade. Reducing trade barriers and participating in programs like Erasmus could benefit international trade and education businesses. However, in addition to realigning regulatory regimes, renegotiation processes might create uncertainty and temporary trade disruptions, affecting supply chains and market stability.

The coalition would prioritise renewable energy in energy policy and investment. Their strategies could create a robust market for green technologies, but they might result in higher energy costs and supply inconsistencies during the transition phase. Businesses may need to invest in new technologies and processes, incurring significant upfront costs. There will also be uncertainty about the types of incentives the government offers as Labour and Liberal Democrats work things out.

Economic policies under the coalition could include Labour’s windfall tax on excess profits from oil and gas companies and whatever the Liberal Democrats envision in their industrial strategy plans. However, increased taxes seem likely to fund both parties' plans and stringent policies could reduce profit margins for traditional energy sectors and heighten competition.

Final Points

The 2024 General Election will shape the UK’s foreign and security policies for years to come. With pressing international issues in mind, the outcome of this election holds significant implications for businesses. Policy shifts present opportunities for growth and innovation but also bring inherent risks that businesses must strategically manage to ensure sustained success. As the political landscape evolves, staying informed and agile will be crucial for businesses navigating these changes​.