Stocks and markets to watch if Nigel Farage and Reform win the next general election

A political storm is brewing

The following is not financial or investment advice. Past performance is not a guarantee of future returns.

British politics has not looked like this since at least the 1980s, and arguably never. A party that did not exist in its current form until 2021 is now by several metrics the most popular political force in the country, regularly polling ahead of both Labour and the Conservatives. It’s reshaping the centre of political gravity, and forcing every other party into reacting.

Reform UK, led by Nigel Farage, began 2025 as the insurgent challenger. It ended it as the dominant force in English local government and, if the polling is to be believed, is now the frontrunner for the next general election.

The most recent Politico Poll of Polls has Reform at 27% of the vote share, compared to Labour at 18%, the Conservatives at 17% and another upstart, the Greens, at 16%.

Whether that translates into Downing Street remains uncertain. But the probability is now high enough, and the policy agenda distinctive enough, that investors, businesses and market watchers would be unwise to ignore it.

Local election earthquake

The clearest signal of Reform's momentum came on 1 May 2025, when local elections were held across 23 English councils. The results were, by any measure, extraordinary. Reform UK won the largest number of seats with 677, amounting to 41% of all seats up for election.

Academic analysts Rallings and Thrasher estimated that, had the elections taken place across the whole country, Reform would have won an estimated 32% of the vote, with Labour in second on 19, down from 34% in 2024.

The BBC described the elections as a ‘sweeping victory’ for Reform. Crucially, the party did not just pile up votes; it converted them into control, gaining 10 councils. This is the first time that Reform has controlled any councils in local government. The party also secured directly elected mayors in Greater Lincolnshire and Hull and East Yorkshire, giving Farage's movement its first taste of executive power.

For Labour, the results were deeply uncomfortable. Labour's 2025 result was the lowest proportion of seats that Labour has won in over 20 years. The Conservatives fared little better, and the combined vote share of Britain's two traditional governing parties has hit historic lows with the Greens contending to offer another alternative vision.

Where the General Election stands

The next general election must be held no later than August 2029. The current Labour government, elected with a landslide majority in July 2024, has no obligation to go to the country early, and with more than three years of Parliament remaining, Keir Starmer has no obvious incentive to call an early vote. That means the window is long, which in current British politics feels like an eternity.

But the polling tells a striking story of what would happen if voters went to the polls today. For example, a recent MRP poll placed Reform on 31%, ahead of the Conservatives on 21% with Labour in third place on 17%. On these figures, Reform is predicted to secure 335 seats with an outright majority of 20.

The most recent Ipsos data, from January 2026, shows Reform UK on 30%, Labour on 22%, and the Conservatives on 19%, a clear lead of 8 points. That lead has narrowed from a peak of 15 points in November 2025, and there are significant caveats. Just 25% of Britons agree that Reform is ready to form the next government, while 58% disagree. By comparison, 65% of voters believed Labour was ready for government just before it won its landslide in July 2024.

There is also the tactical voting variable. MRP analysis suggests that without tactical voting, Reform could win a majority of 240 or more. When tactical voting is factored in, the party would lose over 75 seats, benefiting Labour, the Conservatives and the Liberal Democrats. The shape of a future election campaign, and whether anti-Reform coordination holds together, will be decisive.

Tomorrow’s by-election in Gorton and Denton may well be the litmus test.

Still, for all the uncertainty, the direction of travel is clear. Reform is not going away. And even if it falls short of an outright majority, a strong showing that forces a coalition or confidence arrangement could put Farage and his allies in positions of real influence over economic and regulatory policy.

Farage was not in power when the Brexit vote was cast, but arguably in many ways, still had the power to make it happen.

What Reform's policy platform could mean for investors

Reform's economic platform is unlikely to be viewed as a conventional centre-right prospectus. It is, in several respects, more radical. The party has proposed scrapping net zero targets, withdrawing from international climate commitments, lifting the ban on new North Sea oil and gas licences and dramatically cutting public spending outside health and defence.

It has also promised to reduce income tax thresholds, cut inheritance tax, and strip back environmental regulation on business.

For investors, this agenda has a reasonably clear set of implications, both positive and negative.

North Sea Oil and Gas

Reform has made energy policy central to its offer, pledging to scrap the Energy Profits Levy (the North Sea windfall tax) and accelerate licensing for new exploration and production. This would be a significant tailwind for companies with North Sea exposure. Shell and BP, both FTSE 100 stalwarts with substantial UK upstream operations, would benefit from reduced taxation and a more permissive regulatory environment.

Smaller North Sea-focused operators such as Harbour Energy, which has been among the most vocal critics of the windfall tax, could see a more immediate and direct boost. Energy services companies, including Petrofac and Wood Group, might also benefit from a pipeline of new exploration activity.

Defence

Reform has pledged to increase defence spending significantly, targeting 2.5% of GDP and potentially higher. This aligns with growing NATO pressure and the changed European security environment following Russia's invasion of Ukraine.

UK defence contractors including BAE Systems, Rolls-Royce (through its submarine and aerospace divisions), Babcock International and QinetiQ would all stand to benefit from a sustained increase in the defence budget. BAE Systems in particular, already buoyed by elevated order books and a global rearmament trend, could be a natural beneficiary of any government serious about defence investment.

Private healthcare

Reform's scepticism toward public sector expansion, combined with its rhetoric about NHS reform and its sympathy for greater private sector involvement in healthcare delivery, could create a positive environment for private hospital operators and healthcare providers.

Companies such as Spire Healthcare and Nuffield Health are already benefiting from NHS waiting list pressures driving private consultations and procedures. A Reform government that opens more doors to private provision, or reduces regulatory barriers for independent providers, could accelerate that trend.

Financial services

Reform has spoken about rolling back elements of post-Brexit financial regulation and reducing compliance burdens on businesses.

A lighter-touch regulatory environment would benefit challenger banks, asset managers and fintech companies operating in the UK, as well as traditional high street banks frustrated by capital and conduct requirements. The broader message of cutting red tape could boost domestically focused mid-cap stocks across sectors.

Renewables and clean energy

This is the sector most directly in the crosshairs of Reform's energy policy. The party's hostility to net zero, its opposition to onshore wind, and its commitment to scrapping green energy subsidies could create uncertainty for the UK's renewable energy industry.

Listed renewable infrastructure investment trusts, including Greencoat UK Wind, the Renewables Infrastructure Group and Gore Street Energy Storage Fund, are already trading at discounts to net asset value, possibly as a result of this fear.

While much may be priced in, a hostile government could add further pressure, potentially delaying or cancelling subsidy mechanisms and making the UK a less attractive destination for clean energy investment.

The BBC and public broadcasting

Reform has made no secret of its dislike of the BBC and the licence fee model. Farage has described the BBC as institutionally biased and several senior figures in the party have advocated either abolishing the licence fee or moving to a subscription model.

While the BBC itself is not a listed company, its fate shapes the broader UK media landscape. A weakened BBC could benefit commercial rivals including ITV alongside streaming platforms, while suppliers to public broadcasting would face uncertainty.

Sterling, Gilts and UK equities

Beyond individual sectors, a Reform government could have macro-level effects on UK financial markets including the FTSE 100.

On the positive side, a strongly pro-business, tax-cutting agenda could boost sentiment toward UK domestic equities, which have traded at a persistent discount to global peers partly due to political uncertainty and sluggish growth. A government seen as pro-investment could narrow that discount.

On the other hand, the potential for large unfunded tax cuts could alarm the bond markets. The memory of the September 2022 mini-budget, when Liz Truss's fiscal plans triggered a gilt market crisis and a sharp fall in sterling, would weigh heavily on any administration promising significant tax reductions without credible spending offsets.

Reform will need to demonstrate fiscal credibility early, and the markets would be watching closely for signs that the playbook had been learned.

Sterling itself is hard to call. A business-friendly domestic agenda might support the pound, but fiscal risk, ongoing uncertainty about UK-EU trade relations, and the sheer novelty of a Reform government could generate volatility in the near term.

A long road to Downing Street

For all the extraordinary momentum Reform has generated, it is worth maintaining perspective. The next general election is more than three years away. Labour retains a structural majority in Parliament and has no incentive to go early. Polling leads can and do evaporate, and the gap between Reform's poll numbers and voter confidence in its readiness to govern remains a potential vulnerability.

What is clear, however, is that the political centre of gravity in Britain has shifted decisively. Even if Reform does not win in 2029, its policy positions are already pulling the Conservative Party rightward on tax, immigration and energy, and forcing Labour to defend territory it once took for granted. For investors, that means the policy direction of travel matters now, not just if and when Reform reaches Downing Street.