Nevertheless, the Labour government could affect several things in the private credit world. Not to forget also that, in a year when about half the world's population is called to vote, elections impact is far from being only UK-related. Very soon, France will have an answer on its government after Sunday’s second round of polls.

“From a business perspective, far-right is probably a bit less damaging than far-left,” a lender said to 9fin.

And after last week's debate, the US November election is very much back to everyone’s minds — with doubts whether incumbent President Joe Biden will even remain on the ballot after that performance, as former President Donald Trump widened his polls lead.

But back to the UK, here are the main points on private credit specialists' minds.

Tax anxiety

“On the tax side, Labour has promised no rises in income tax, VAT or corporation tax this parliament,” summarised a Nomura report published today.

However, the private equity world is anxiously looking at some expected moves. Most notably, incoming chancellor of the exchequer Rachel Reeves has called the “carried interest” tax loophole absurd and, in office, is expected to move to end it.

The loophole lets private equity fund managers pay a capital gains tax on investment returns. Under the current regime that means a 28% tax of those earnings. Treating them as income would involve a tax rate as high as 45%. Clearly, such a plan doesn’t sit well with private equity.

Other plans include higher taxes on non-doms, removing an inheritance tax loophole and raising stamp duty on houses bought by non-UK residents. Despite some open discontent, the general approach is to wait and see.

“At the moment, there is a lot of mood music around private equity and carried interest, but that seems to be softening,” Stuart Brinkworth, European head of leveraged finance at Mayer Brown, told 9fin in a interview. “It seems like Labour has some appreciation for the importance of the industry to the economy and so hopefully any changes will not harm the industry.”

The cost of education

Nomura pointed out that, among the number of taxes that Labour plans to increase, one of the most notable is “charging VAT on private schools”.

Starmer has spoken of charging private schools 20% VAT but has dropped plans to strip private schools of their charitable status.

Back in May, education prominently featured among sectors potentially affected by a Labour government, in a series of 9fin’s forecasts after Rishi Sunak announced the general election.

Any move on schools could have an impact on deals in an active sector that has been a favourite of direct lenders. Nord Anglia Education has been exploring a sale process that could value the international school operator at more than £10bn. In May, international nursery operator Busy Bees closed a £300m+ dividend recap financed by a club of direct lenders as PIK.

Interest rates

On the interest rate front, the Bank of England is likely to pursue a slow pace of cuts.

“Within the sector there is optimism about the UK’s return to growth and importantly, with inflation under control, an expectation that interest rates will fall in the near-term,” said Andy Lund, global co-head of Houlihan Lokey’s Private Funds Group.

“We think any impact on the Bank of England’s decision-making will be limited,” Nomura report states.

“We continue to expect the Bank of England to cut rates at a quarterly pace, beginning with the first 25bp move in August, and concluding in early 2026 with rates at that point having been cut to 3.50% – which we think is around neutral,” Nomura added. “Markets are pricing in 16bp for August, a cumulative 23bp for September, 47bp by year-end and 89bp by mid-2025.”

Some risk the Bank cuts rates by less might come from “an emboldened Labour government providing significantly more fiscal support”, Nomura stated, “and the possibility that abolishing the age bands in the minimum wage (and raising it) would have the effect of sustaining higher wage growth, particularly in the spring of next year when this might come into force”.

Will stability help M&A?

Overall, the very clear result will bring greater certainty and stability, which is what markets want to operate. Will this finally unlock the flow of M&A that everyone has been anticipating?

“Uncertainty stifles market activity so having the election result will have a beneficial impact,” Houlihan Lokey’s Lund said. “This, combined with an improving economic picture, should have a positive effect on the UK’s M&A market.”

“An early election is on the whole positive for the market as it removes macro uncertainty, which can be a hindrance to executing deals,” Nick Holman, head of UK and Ireland at Kartesia, said to 9fin after the election was announced.

“Combined with […] lower inflation and return to economic growth, this bodes well for an improved M&A outlook going into Q4,” he added.

“In the short-term, I don't think there will be many changes,” Mayer Brown’s Brinkworth, said. ”We're going to end up with a government with a big majority, so at least that brings certainty. Whether it's a certainty a lot of people want is another thing.”

European private credit pipeline

It might have been the calm before the elections storm, but this week looked subdued on the deals front.

An exception was Germany, where the flow of carve-outs in recent months has kept going. Most recently, listed logistics services and warehousing technology provider Jungheinrich AG has mandated Houlihan Lokey to advise on the sale of its business unit, stacker cranes and load handling equipment maker MIAS Group. The firm is being marketed off EBITDA of around €30m.

For the full run down on all the in-market deals in our pipeline, please email subscriptions@9fin.com.