As the UK turns red, it also blushes green.

On Friday, the UK threw out the ruling Conservative Party in favor of the left-wing Labour Party. One industry that will be looking to Britain with a dash more optimism than before: renewable energy. Labour has promised big shifts in the UK’s energy policy, but will it deliver?

A Labour of Love

One of the pillars of Labour’s election campaign was to make the UK a “clean energy superpower.” Three major policies emerged as part of that plan: establish a nationally owned energy company called GB Energy, set up a “National Wealth Fund” that includes provisions for green transition investment, and lift a de facto ban on onshore wind. Labour also said that while it will honor existing oil and gas exploration licenses, no new ones will be issued.

Labour’s green goals aren’t as ambitious as they once were. In February, it scrapped a commitment to spend £28 billion ($35.8 billion) per year on green investment. Its funding in GB Energy will now be capped at £8.3 billion ($10.6 billion) and the new National Wealth Fund — which isn’t entirely earmarked for green energy — is capped at £7.3 billion ($9.3 billion). Leo Mercer, a policy expert at the Grantham Research Institute on Climate Change and the Environment, said Labour will face some challenges:

• “They’ve set themselves incredibly tight fiscal constraints,” Mercer said, as Labour has promised not to raise taxes or radically increase public spending. 
• He added that the new bodies Labour is setting up may have overlapping remits, and crowd each other out competing for the same assets with public money — potentially crowding out private investment in the process.

In a 2020 analysis the UK’s independent Climate Change Committee (CCC) found that in order to meet its decarbonization goals, the UK needs to bring in £50 billion ($63.9 billion) in total investment, both private and public, per annum by 2030.

Changing of the Guard: Although the future for the Labour government involves some fiscal tightrope-walking, the outlook for the renewables sector is better than it was before, Mercer said. The past two years of Conservative politics have seen flip-flops on green policy that damaged investor confidence, Mercer said, and although Labour has also watered down how much money it’s willing to spend, it has a clearer party line on green energy. “[Investors] will be much more likely to make these investments because they know they’ve got the long-term policy certainty,” said Mercer.

Like the UK, France has tilted left, producing much head-scratching and la confusion about how it’s all going to work. 

The Nouveau Front Populaire (NFP), a coalition of socialists and greens, won a shock upset in France’s parliamentary elections Sunday, though no bloc won an outright majority. Prime Minister Gabriel Attal, a member of President Emmanuel Macron’s centrist alliance — which came in second — offered to resign but was asked to stay on as caretaker. The far-right Rassemblement National (RN), which led polls, fell to third place. Markets need time to digest, and politicians need time to figure out what on earth the government will look like.

Quelle Surprise Surprise

France’s largest firms account for over 40% of the total assets of the benchmark Euro Stoxx 50 Index, giving the country significant influence over general investor sentiment. Markets have been stressed in recent weeks due to a possible victory by the RN, which promised protectionism and unfunded tax cuts in a year when the IMF already predicts France’s budget deficit will rise to 5.3% of GDP, up considerably from 3% in 2019.

France’s benchmark CAC 40 index has been the worst performer in Europe since the election was called on June 9. Sunday’s result, so unexpected that one TV network didn’t have time to fix the ratio of its election results graphic before displaying it on screen, introduces both relief and uncertainty:

• The NFP promised to spend €200 billion on key priorities over the next five years, but was unclear about where that money would come from. “For markets, basically the tail risks have been avoided and although the left has unaffordable spending plans, the left will need allies and will only be able to implement some of their promises,” Holger Schmieding, chief economist at Berenberg Bank, told Reuters.
• Former President François Hollande, a member of the Socialist Party who re-entered politics and won a seat in the election, has said a unity government could agree on compromise policies, which could also calm markets. But Jean-Luc Mélenchon, the leader of the leftist La France Insoumise party that joined the Socialists in the NFP bloc, insisted Sunday that their alliance should be invited to govern.

Collective “Phew”: While a hung parliament is not ideal, averting an RN government brought relative calm to markets Monday, with the CAC 40 up 0.3% and the Euro Stoxx 50 up 0.5% in the early afternoon.

Like a dormant volcano, defunct crypto exchange Mt. Gox is erupting a decade after its bankruptcy, unleashing investor suffering all over again.

On Friday, Mt. Gox’s estate trustee announced it had begun paying off its roughly $9 billion debt to former customers, sparking a massive selloff of the OG cryptocurrency. The one-off event shows both how much the bitcoin market has grown and how volatile it remains.

How Low Can You Go?

For those with a hazy memory of the early days of crypto, Mt. Gox, which launched in 2010, was the marquee crypto exchange. Until it wasn’t. By 2013, it processed roughly 75% of all global bitcoin trades, per a 2013 feature in The Verge. Then came a massive heist, and, by early 2014, bankruptcy. The hackers had stolen around $400 million worth of bitcoin. At today’s value? That’d be worth around $45 billion (there’s a reason bitcoin truthers preach Holding On For Dear Life).

After 10 years of lawsuits and legal battles and a bit-by-bit recovery process, Mt. Gox is prepared to repay around $9 billion worth of bitcoin and bitcoin cash to its customer base. While that’s just a fraction of what investors should be owed, the liquidation event is still massive enough to rattle the entire market:

• By early Friday morning, a burst of selling pushed the price of bitcoin down to $53,500, its first time below $55,000 since February. Meanwhile, the German government last week sold around $175 million worth of bitcoin it had seized in an anti-piracy operation, further fueling a broader sell-off.
• While clawing back some of its losses, bitcoin was still trading under $60,000 as of Sunday afternoon, which most investors consider its critical support level, as well as below its 200-day simple moving average; it’s down roughly 18% over the past month. The entire crypto industry shed roughly $170 billion in value over a 24-hour window on Friday, according to CoinGecko data.

“Bitcoin is more likely to fall to $51,500 than rise to $65,800,” FxPro senior market analyst Alex Kuptsikevich told Decrypt last week.

ETF Phone Home: The rise of spot bitcoin ETFs earlier this year has placed much of the currency’s value at the mercy of large entities and institutional investors. Those groups tend to still view it as a not-so-stable bet. “Crypto ETFs belong to the most volatile investments in a traditional investment portfolio,” Basile Maire, co-founder of the exchange D8X, told Decrypt. “Therefore, whenever portfolio managers need to sell the most risky assets, crypto is a likely candidate.”