Bollixed

  By Guest Blogger Doug Rowat

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The UK will soon have its fifth prime minister in as many years as a replacement for the resigning Keir Starmer (above) will probably be determined later this month. UK prime ministers have a habit of flaming out before they even really get started. Here are some recent highlights:

• Boris Johnson. Where to begin? Had a lengthy conversation with the Armenian prime minister, who turned out to be a radio DJ pranking him. Appointed Conservative Party whip Chris Pincher who was accused of groping two men at a London club; Johnson apparently knew of the accusations and appointed him anyways. Engaged in countless Covid lockdown violations. The cherry on top? Completely flattened a little kid in a pick-up rugby game: Johnson resigned in 2022.

• Liz Truss. Her proposed mini-budget threatened to tank the entire UK economy and forced the Bank of England to intervene. Truss resigned in 2022 and she holds the record for the shortest serving prime minister at only 45 days.
• Rishi Sunak. Widely criticized for his elitism, he reportedly asked a homeless man at a London shelter if he “worked in business”. Sunak called a snap election in 2024 and lost in a landslide to Keir Starmer.
• Keir Starmer. Appointed Peter Mandelson as UK ambassador to the US. Mandelson was later revealed to be a close personal friend of Jeffrey Epstein. Starmer resigned last month.

Starmer has also presided over a period of considerable economic weakness for the UK. Not all of it was his fault as the lingering consequences of Brexit, Covid and an inflation and energy crisis due to the Ukraine war weighed on the UK economy. But nevertheless, the UK has barely eclipsed 1% GDP growth over the past two years and both the OECD and IMF estimate economic growth this year will be even worse (both have sub-1% GDP growth estimates for 2026).

But despite the UK’s economic sluggishness and its crash-and-burn leadership, UK equities have done just fine. Over the past five years, the FTSE 100 has not only eclipsed European equities overall, but it’s outperformed our Canadian market and nearly kept pace with the tech-heavy S&P 500. Better yet, unlike the S&P 500, few analysts are worried that the FTSE 100 is overvalued as it trades at a significant discount to all of the above markets:

Politics be damned: UK equities have held their own

Source: FactSet, Turner Investments

Why is the FTSE 100 Index doing so well? Many of the Index’s heaviest-weighted stocks have performed spectacularly. Shell Plc, for example, is up 85% over the past five years. AstraZeneca Plc is up 52%. And HSBC Holdings Plc, the UK’s largest bank, is up 232%. These are stocks driven not by politics but by commodity prices, drug pipelines, capital markets and, most importantly, international revenue.

But politically, more turmoil could be on the horizon in the UK as Nigel Farage, who many believed was dead and buried, now has a legitimate shot at winning the next general election as his far-right Reform UK party is running neck and neck with the Labour Party in the polls.

But if he is elected should investors then abandon UK equities? Of course not. The UK has clearly taught us that subpar politicians don’t result in subpar markets.

Never, ever conflate political performance with market performance.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.

Source: https://www.greaterfool.ca/2026/07/04/bollixed/