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Bankers and Business Welcome Cameron Win Despite EU Fears

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British businesses from banks to power companies are poised to gain from David Cameron’s expected victory in the U.K. election, despite fears about his promise to hold an “in-out” vote on British membership of the European Union and huge gains for the Scottish National Party.

The FTSE 100 index of leading U.K. companies jumped more than 2 per cent at 8:08 a.m. in London, after projections from pollsters that Cameron’s Conservative Party was close to being able to form a government without needing a coalition.

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Barclays Plc shares rose more than 5 percent and Lloyds Banking Group Plc by more than 7 percent as investors welcomed what is likely to be more a benign tax and regulation regime for the industry than promised by Cameron’s challenger Ed Miliband.

“People will be surprised at the result,” Simon Walker, director general of the Institute of Directors, said in an interview with Bloomberg Television. “Business is pretty resilient but there’s positive feeling about continuing on the same course and I think the markets will react well.”

Miliband, the Labour Party leader, had promised a series of new measures including more levies on bank balance sheets, higher taxes on the wealthy and fixed prices in the household energy sector.

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Shares in Centrica Plc, a power utility, also rallied by almost 8 percent in London as investors expressed relief that it would avoid having its household energy bills fixed by a Labour government.

U.K. gambling companies such as Ladbrokes Plc had also been vulnerable to Labour’s plans to curtail betting terminals in their shops, while estate agents such as Foxtons Group Plc could have suffered from a Miliband “mansion tax” on houses worth more than 2 million pounds ($309 million).

Shares in outsourcers Babcock International Group Plc and Capita Plc also soared on the expectation that a Conservative government would give more contracts to the private sector. House-builders Barratt Developments Plc and Taylor Wimpey Plc also made big gains.

However, the jubilation among bankers and companies will be tempered by worries about Cameron’s promise to hold a referendum on the EU in 2017, with some companies fearing it will damage trade with Europe and hinder foreign investment in Britain.

“The EU referendum is the event that creates a massive degree of uncertainty,” said Charles Allen, a senior analyst for Bloomberg Intelligence.

The success of the Scottish National Party, which made huge gains against Labour, will make companies in Scotland think again about whether they need to shift their headquarters to England, Allen said.

Retail companies such as Sports Direct International Plc also emerged as winners from a Cameron victory, after Miliband promised to increase the minimum wage and scrap so-called “zero-hour” work contracts.

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