The UK markets have taken Labour’s third successive election victory in their stride, with equities, gilts and sterling all little changed in early trading. Investors’ two least favoured results (a hung Parliament and a very narrow Labour majority) were avoided.

But it would be a mistake for investors to be too sanguine. Given the presence of around 50 Labour rebels, it will be hard to push through any of the Blairite reformist agenda. While the opposition is disparate, many of the parties (the Liberal Democrats, the nationalists, the independents) tend to be in favour of higher public expenditure and against reform. The Conservatives, as all oppositions tend to do, will naturally delight in any chance to embarrass the government. Thus, the result of this election is likely to drive the government in more of an old Labour than a new Labour direction, not what the markets want at all.