What could the job mean for ROI? How prime ministers have fared since 1970

• In the past, Labor governments have delivered better annual returns
• The premierships of Harold Wilson and Jim Callaghan were the most lucrative

Investors will be wondering what the future holds with Labor now in power.

Digging back into the historical data shows that Labor has largely had positive returns while in office.

The FTSE 250 rose as much as 1.7 percent on Friday morning on news of the new government, although most of the gains were erased by the afternoon.

In the past, Labor governments have achieved market returns more than double those of the Conservatives, according to InvestEngine analysis.

This is based on 18 years of Labor government compared to 36 years of the Conservatives.

Andrew Prosser, head of investments at InvestEngine, said: “The figures show that a Labor government is more than twice as “friendly” to British businesses, with a return of almost 11 per cent compared to just over 5 per cent under the Tories.

“Of the 13 prime ministers we’ve had since 1970, only four have been Labor to nine Conservatives, but in terms of annual returns, the top two prime ministers are Labour.

Harold Wilson’s run for Prime Minister from 1974 to 1976 turns out to be the most lucrative in terms of annual returns, returning an average of 20 percent a year.

Meanwhile, Jim Callaghan’s premiership also saw annual returns of 20 percent.

While Margaret Thatcher and John Major achieved returns of 488 per cent and 159 per cent each during their prime ministers, this only translates into annual returns of 17 per cent and 16 per cent respectively.

Similarly, Tony Blair is in the middle of the pack with annual returns of just seven per cent, despite total returns of 92 per cent.

David Cameron had some success with a nine per cent return when he was in coalition with Nick Clegg, but this dropped to just one per cent during his solo premiership.

The data below is based on the MSCI UK total net return in GBP between June 1970 and July 2024. It measures the performance of the large and mid-cap segments of the UK market.

While Gordon Brown’s premiership produced the worst overall return, at negative nine per cent, this translates into a negative three per cent annual return.

Liz Truss, meanwhile, had a better total return during her tenure, but her short stay in Downing Street means that in annual terms her prime ministership has seen a negative 25% return.

“Perhaps it’s no surprise that behind, with annual returns of negative 25 per cent, is Liz Truss during her historically short 50-day premiership,” Prosser said.

What does this mean for Keir Starmer’s premiership?

Given the length of time they have spent in power, the Conservatives would have achieved better returns cumulatively, InvestEngine said.

As a result, he said that prioritizing a buy-and-hold strategy is the most effective way to grow wealth, rather than being swayed by political changes.

“Despite the fact that annual returns are lower under the Tories, £100 would rise to £4,902 under a Conservative government but only £447 under Labour, simply because they have been in power longer,” Prosser said.

“However, if investors held that £100 across all policy regimes, the same £100 would be worth £21,893 today.”

“For any investor, the greatest asset you can have is time; the longer your money is invested, the more time it has to grow. Timing the market also gives portfolios a chance to benefit from the wonders of compound interest,” he said.

Given the initial positive reaction of the markets, investors are likely to hold on to the hope that history will repeat itself.