Voters in the UK head to the polls today (4 July), and in three days time (7 July), French voters will leave home for the second round of voting. 

Both countries seem set to replace respective governments, albeit with very different agendas – business figures should pay close attention to proceedings.

According to UK opinion polls, the centre-left Labour Party of Keir Starmer is set for a huge election win, possibly surpassing the 1997 landslide campaign led by Tony Blair. In France, the first round of voting and opinion polls suggest a surge in support for the National Rally (RN), a right wing-populist party.

Keir Starmer, Labour leader – Credit: Rupert Rivett, Shutterstock

The impact of these very divergent electoral changes for the financial industries, including the payments and fintech sectors, could be boundless. Firstly, consider stability in the markets, with London and Paris home to two of Europe’s biggest exchanges, the London Stock Exchange (LSE) and Paris Euronext.

Electoral results can often lead to major market changes, such as devaluation of currencies and increasing inflation. Although not a general election, the transition of leadership between Liz Truss and Rishi Sunak in 2022 saw a stabilisation of the UK economy as market confidence in the government grew.

Perhaps a more striking example is the election of Javier Milei as President of Argentina last year. Milei’s vocal opinions around economics and governance, such as his desire to ‘take a chainsaw’ to red tape and to replace the Argentine peso with the US dollar as national currency, saw significant devaluation of national banknotes and high inflation.

“When you consider the polarisation that sadly afflicts today’s societies, elections have the power to drastically swing governmental direction, resulting in substantial economic turmoil,” says Daniel Cohen, CEO of PayU GPO.

“The stability of macro economies is crucial for fintech companies, especially startups. Factors such as currency volatility, inflation rates, and the availability of hard currency can profoundly influence business strategies and operations – particularly in emerging markets, Nigeria is one example, Argentina another.”

The second major factor to consider is, inspiring, party policies. Changes in government almost always come with changes in ideology, and with that changes in policy. With economics high on the agenda for any government, the financial sectors will feel the impact of this, for better or worse.

Although election day has only just commenced, every opinion poll since January suggests that Labour is on course for a victory in a complete reversal of the Conservative Party’s 2019 crushing electoral victory.

Rishi Suank
Rishi Suank, during his days as Chancellor – Credit: Fred Duval, Shuttesrtock

So, if the polls are accurate, what can fintech expect from Labour? In the grand scheme of things, it doesn’t seem there will be too many changes from Rishi Sunak’s administration – with the UK financial sector a multi-billion pound industry, both parties seem to recognise its significance for the country’s modern economy.

Like its Conservative rival, Labour is keen to see continued adoption and development of Open Banking. The party’s manifesto also sees Artificial Intelligence (AI) as playing a potentially huge role in British economic growth, although it does seem more cautious than the Tories, likely due to concerns around job losses. 

To oversee safe AI development, the party wants to create a ‘Regulatory Innovation Office’, stating that the purpose of this body would be to “help regulators update regulation, speed up approval timelines, and co-ordinate issues that span existing boundaries”.

A notable area of finance the party has taken aim at the Conservatives on is retail banking. Rachel Reeves, the Shadow Chancellor of the Exchequer who will oversee Britain’s economy should Labour win, has mapped out plans for ‘community banking hubs’ to provide consumers continued access to retail banking services.

An area we can expect some divergence on, perhaps, is cryptocurrency. The Conservatives have been supporting a ‘Digital Britain’ policy and Rishi Sunak is a long-term advocate of the crypto sector. Labour has been comparatively quiet on this front, which could be indicative of either disinterest or dislike of cryptocurrency.

Lastly, the latest revelation on Labour’s financial policies came this week when the party, according to the Financial Times, drafted plans to place a heavier responsibility for fraud reimbursement on big tech firms. This comes just a few months ahead of new regulations on fraud reimbursement as part of the Payment Systems Regulator’s overhaul on APP fraud. 

So what about France? Much of the media reporting around the National Rally, and much of the party’s rhetoric, has focused more on issues like immigration, citizenship and its Euroscepticism. However, Marine Le Pen’s party does have some financial policies.

Marine Le Pen, National Rally – Credit: Tennessee Witney / Shutterstock

Speaking to Retuers last month, Jean-Philippe Tanguy, a National Rally lawmaker in the French Assembly, emphasised that the party’s focus is on cutting the deficit. The party believes that the French national debt has been too high for too long.

“We won’t let the deficit run out of control,” he told the media outlet. “We won’t use any wiggle room, which France no longer has, and we will break with 50 years of systematically running deficits.”

We haven’t been able to gain as much clarity on the party’s policies towards fintech as we have with Labour. However, plans for spending and France’s economic future will undoubtedly have a knock-on-effect on the country’s fintech and payments networks.

Again, it is important to not assume that RN’s victory is guaranteed. The left-wing New Popular Front is behind the party by only a few percentage points, and left and centre politicians have been scrambling to see how they can work together to prevent a far-right victory. This divergence of ideologies will see a divergence of polices, which could in turn see very different regulatory approaches.

“Political changes can also lead to regulatory upheavals and alter the course of digital innovation,” PayU’s Cohen continues.

“These elements can create a volatile environment for fintech companies that need some level of predictability and stability to carry out their money-related operations. A government supportive of technological innovation and digital financial services can foster a thriving fintech ecosystem. Conversely, a government that enacts restrictive regulations can stifle innovation and hinder growth.

“Fintech leaders must remain acutely aware of political developments across the countries they operate in, and be prepared to adapt to the changing political and economic environments.”