Labour leader Keir Starmer spoke recently about how those with the broadest shoulders should “bear the heaviest burden”.
He was speaking in relation to what he conceded will be a “painful” October budget in which tax rises are all but an inevitability.
The thinly veiled implication is that the upper echelons of the wealth ladder will be most exposed to these inevitable tax changes.
Analysts at Shore Capital Market see here a potential headwind for Watches of Switzerland Group PLC (LSE:WOSG)- and the luxury sector as a whole.
Discussing WoS’ Tuesday trading update, Shore Cap highlighted a number of positives for the luxury watch retailer, including “a strong balance sheet and immense retailing capability”.
Trading, especially in the UK, has been reassuring after a “torrid” 12 months, but with this optimism came a big caveat.
“We observe the rhetoric of the new Labour Government with some concern about what the Budget may mean in terms of taxing those with the broadest shoulders.
In that context, if the decisions revealed on 30 October live up to some of the billing, the momentum for discretionary consumer goods — and luxury in particular in the UK — may be further impeded, even with favourable comparatives.
“In this respect, once the market has digested this in-line update, there could be a period of ‘wait and see’ regarding how the Budget impacts sentiment and market conditions thereafter.”
Shore Cap sees the potential for “considerable upside” when taking into account WoS’ risk-reward balance, though maybe more so after the UK Budget.