The UK General Election 2024
The current UK government has called for the general election to be held on Thursday 4th July 2024. The current party in power, the Conservatives, are hoping to be re-elected for another term in Parliament. However, after a tumultuous period since the last election, the Labour Party is hoping the nation will vote for change. Other parties too, such as the Liberal Democrats and the Green Party, are hoping to increase their presence within government.
A general election is a chance for the UK to vote on who it would like in power in government. The political implications for the finance industry can be huge. Each political party will be outlining its plans for the UK. The party in power controls the UK budget, including taxation and spending, and can ultimately have influence over interest rates.
The broad economic implications of a general election are wide and varied. Here, we are attempting to look specifically at how these implications might affect camper van and motorhome finance.
Economic Stability and Consumer Confidence
The pre-election period brings uncertainty to many. This uncertainty can lead to a drop in consumer confidence. In the lead-up to an election, potential camper van and motorhome buyers might adopt a wait-and-see approach. They may delay their purchase until the economic situation becomes clearer.
Having said that, the leisure vehicle market is in its busiest season. Potential customers are purchasing their vehicles now, to get the most out of a hopefully long British summer. In our opinion at Pegasus Finance, we believe those customers ready to purchase their dream camper van or motorhome won’t wait until after the general election. Since the announcement of the election, we haven’t really seen any fluctuations in the market. Interest rates are high, but were not increased at the last opportunity. As UK growth and economy stablises, interest rates are likely to fall. Should this happen, large purchases made using finance may become more affordable for some. It depends on your personal circumstances. This is where using a specialist broker like Pegasus Finance is a real benefit. We deal with multiple lenders and can help in a wide variety of personal circumstances. From secured and un-secured finance to joint applications, homeowners, renters, and those with a poor credit history.
The period post-election can bring an immediate upturn in consumer confidence. A stable government offers reassurance to markets and can boost economic stability. In turn, these could have a positive impact on the leisure vehicle market. But as with all things, any changes won’t happen overnight. We don’t expect buyers to delay making a camper van or motorhome purchase for the sake of the general election.
Interest Rates and Lending Policies
The government’s economic policies, such as spending and taxation, can influence the overall economy. In turn, this affects factors like inflation and growth. In response to high inflation, the Bank of England may adjust interest rates to keep the economy stable. For example, if government policies lead to high inflation, the Bank might raise interest rates to control it, making loans more expensive.
We have seen record-high interest rates and inflation in recent times, due to many factors. Higher interest rates mean finance becomes more expensive. Mortgages and loans can cost more overall. On the other side, savers benefit from higher interest rates. Savers have been earning more in interest on their savings.
We have experienced the UK economy and inflation slow back down in recent months. Because of this, the Bank of England has not increased interest rates further. If this trend continues, interest rates may fall, making it cheaper to borrow.
“We think the risks to inflation persistence are receding, but we do want to see more evidence to be sufficiently convinced of that before we cut rates.”
Quote from Andrew Bailey, Governor of the Bank of England. This quote was taken from a recent (May 2024) press conference.
With a general election imminent, nobody can say what will happen to the country’s levels of inflation and growth in the short term. Until the election is decided, we won’t know for sure any impacts to financial markets. It’s clear from the quote above from the Governor of the Bank of England, that although the UK is on the right path, it wants to see more consistency before dropping rates.
By understanding the relationship between the government, the Bank of England, and interest rates, buyers can at least be better informed of the implications of each.
What about lending policies? As a finance broker at Pegasus Finance, we deal with a wide variety of lenders who each have their own lending criteria. It puts us in the best position to help more customers find their best deal, especially in times of uncertainty. We aren’t fixed to one lender’s rules.
Changes to financial regulations could affect how easy or how difficult it is to get a loan. We don’t expect to see any financial regulation changes in the near future, but it’s worth bearing in mind. Lenders can change their lending criteria at any time too, which isn’t directly linked to a general election.
The government makes decisions in its budget that controls how much tax we all pay. Changes in VAT and other taxes could affect the total cost of a camper van or motorhome. They could also impact the cost of owning and running a leisure vehicle, specifically with fuel tax and vehicle excise duty (road tax). More recently, ULEZ zones like the one implemented around London and some LEZ zones in other cities, have had a big impact on leisure vehicles owners in those areas.
At the time of writing, no political party in the upcoming general election has made any commitments on the levels of taxation in the UK. However, in the future, we could see things such as tax breaks or subsidies for economic vehicles. Electric and hybrid camper vans particularly are beginning to enter the market, but they do come with a higher price tag. That may be offset in the future by any tax breaks. But for now, we don’t have any firm answers on taxation from any political party.
Economic Policies and Consumer Spending
As explained above, the decisions a government in power makes can affect or influence growth in the market. This could mean many things when it comes to leisure vehicles. From jobs, to finance, to manufacturers. For buyers, having a larger disposable income means purchases on things like leisure vehicles are more likely. Whereas in tough times, if disposable income is falling, it is unlikely these types of purchases will increase.
Leisure vehicle finance from Pegasus Finance can help in both situations. If your disposable income is on the larger side, we could help you find a great finance deal which leaves more of your income available to spend on actually going out and enjoying your new vehicle. More income to spend on trips away, holidays abroad, or just getting out with the family. Customers with less disposable income may not think they can live their dream of owning a camper van or motorhome. However, this isn’t necessarily the case. Thanks to our great relationships with our lenders, we can arrange finance over longer periods of time. Longer-term finance does mean higher rates of interest yes, but they also calculate as lower monthly payments. And if your disposable income increases, you may also have the option to re-finance with a lower rate of interest. Although we must stress, this is far from guaranteed.
Place a no-obligation finance application with Pegasus Finance today. You may be surprised at how affordable your monthly payments could be on your dream leisure vehicle.
Environmental Policies and Their Influence
Although no political party has announced any policies regarding the environment at time of writing, potentially there are some that may impact leisure vehicles. Earlier, we touched on tax breaks or subsidies for eco-friendly vehicles. Let’s explore that more.
Governments can incentivise purchases of environmentally friendly camper vans and motorhomes. These would include electric or hybrid models. If this were to happen, lenders may introduce new loans specifically for these vehicles, tailored to their individuality. For example, a lender might develop special “green” finance packages that reward customers with benefits specifically for electric or hybrid camper vans or motorhomes. By promoting more favourable finance options for these vehicles, lenders can help to encourage more buyers to consider purchasing one.
At Pegasus Finance, we aren’t aware of any such incentives from lenders or political party which are either currently in place or planned to be introduced in the future. Here we are simply outlining what could happen due to a change in government and policies. With the ban on petrol and diesel cars still up in the air, we don’t expect to see any announcements on these policies anytime soon.
Practical Advice For Customers
- Stay Informed: Keep up-to-date with election news and understand the policies proposed by different political parties. This can help you anticipate changes that might affect the economy and interest rates.
- Monitor Interest Rates: Interest rates can be volatile during election periods. Track the Bank of England’s announcements and market trends.
- Evaluate Your Budget: During uncertain times, it’s crucial to reassess your financial situation. Ensure you have a clear idea of your budget and how much you can afford to borrow and repay.
- Look for Incentives: Listen out for any government incentives or subsidies available, especially for eco-friendly leisure vehicles. These can reduce your overall cost and improve financing terms.
- Consult Financial Advisors: Seek advice from financial experts or advisors who can provide insights tailored to your situation.
- Plan for the Long Term: Consider how potential changes in government policies might affect your financial situation in the long run. Choose a financing option that remains manageable even if economic conditions shift.
- Stay Flexible: Be prepared to adapt your plans based on the election outcome. Flexibility can help you take advantage of new opportunities or mitigate risks as the political and economic environment evolves.
Historical Election Results and the Impact on Leisure Vehicle Finance
Obviously there have been many general elections in the past. To understand how the 2024 general election could affect camper van and motorhome finance, let’s take a look at some historical election results and their impact.
- 2010 General Election:
- Result: The 2010 general election resulted in a coalition government between the Conservative Party and the Liberal Democrats. The following period of austerity measures and public spending cuts led to a cautious consumer market.
- Market Reaction: Due to economic uncertainty, there was a temporary dip in leisure vehicle sales. Consumers prioritised saving over spending.
- Finance Options: Lenders became more conservative, tightening credit criteria and raising interest rates to mitigate risk. This made financing more challenging for buyers during this period.
- 2015 General Election:
- Result: The Conservative Party won a majority, leading to greater political stability with a focus on economic growth.
- Market Reaction: Increased consumer confidence post-election boosted demand for leisure vehicles. Sales saw a notable increase as buyers felt more secure in making significant financial commitments.
- Finance Options: With economic stability, lenders offered more competitive finance products, including lower interest rates and more flexible terms.
- 2017 General Election:
- Result: The snap election resulted in a hung parliament, creating political uncertainty and concerns over Brexit negotiations.
- Market Reaction: The uncertainty led to a cautious approach from consumers, temporarily slowing down the leisure vehicle market. Buyers were hesitant to make large purchases.
- Finance Options: Lenders responded with caution, tightening lending criteria and offering less favourable terms. However, some lenders introduced special offers to attract customers despite the uncertain environment.
- 2019 General Election:
- Result: The Conservative Party secured a significant majority, leading to greater clarity on future economic policies.
- Market Reaction: The market saw a resurgence in consumer confidence, with a noticeable increase in leisure vehicle purchases as the political landscape stabilised.
- Finance Options: With increased confidence, lenders introduced more attractive finance products, including lower interest rates and extended repayment periods. Promotional offers and incentives became more common to capitalise on the renewed market interest.
Conclusion
This article is a collection of facts and our own opinions at Pegasus Finance on how the UK general election could affect finance in the leisure vehicle market. Specifically in relation to camper van and motorhome finance. It does contain some speculation on our behalf too.
We discussed economics and consumer confidence just prior to a general election. Next, we looked at interest rates, including how they are managed by the Bank of England and how the UK government can have an effect on rates. We went on to look at how lending and tax policies, as well as economic policies, could affect leisure vehicle finance. Furthermore, we made some notes on environmental policies specifically relating to camper vans and motorhomes, and suggested some practical advice for buyers and those in the market as we head into a general election.
We cannot reiterate it enough, it’s important to stay informed on everything could impact your life when it’s election time. The implications of both keeping the same party in power, or parliament changing, can be wide. In order to make any kind of informed decisions, we need first to be informed.
If you would like to find out more about how Pegasus Finance can help with leisure vehicle finance now or at any time, you can contact our friendly and personal team at [email protected] or call our office on 0800 066 2882.
