LONDON — The U.K.'s Labour Party won a huge parliamentary majority in the country's general election, but a quirk of the British electoral system means it did so with just 34% of the total votes cast.

Results show that the opposition Labour Party has won 412 parliamentary seats of the total 650, with just two seats yet to be declared. This translates as roughly 63% of the total seats, but Labour has won just 34% of the total "popular" vote, while the Conservative Party has secured nearly 24% of that number.

Meanwhile, smaller parties including the centrist Liberal Democrats, right-wing Reform U.K. and the Greens took nearly 43% of the popular vote but gained just less than 18% of the seats available.

This was aided by the U.K.'s "first past the post" system, where voters choose only one single candidate from their local list in each of the country's 650 constituencies. The person with the most votes in each constituency is elected as a Member of Parliament to the House of Commons, the U.K.'s lower house. The party that wins the most seats in the House of Commons usually forms the new government and its leader becomes prime minister.

Unlike in other voting systems, there are no second rounds or ranking of first- and second-choice candidates, meaning it can be difficult for smaller parties to translate an increased share of the popular vote into parliamentary seats.

Gabriella Dickens, G7 economist at AXA Investment Managers, said in a note released Friday that this election "marks a warning sign for the political system, [as] a large majority has been delivered on a little more than a third of the popular vote."

She pointed out that voter turnout was just 60% for this election. That represents the second-lowest turnout rate since 1918, after 2001, when turnout fell to 59.4%. This 7.6% fall in turnout from 2019 indicated a "broader political disconnect," said Dickens.

"The scale of Labour's majority is as much an outcome of the peculiarities of our voting system and an interplay of split votes and the [collapse of the] Scottish National Party (SNP), rather than of a resurgence in Labour's popularity," she said.

That said, Dickens added that the "vote has shifted to the left more generally."

"If the Labour government can govern over the next five years and deliver a recovery in economic growth, investment and individuals' real incomes they should be well placed ... to see a genuine improvement in the future," she said.

Meanwhile, Rob Wood, chief U.K. economist at Pantheon Marcoeconomics, said that investors will need to "chew over how the vote shares, right-wing Reform's results, and voters' willingness to shift political allegiance translates into policy."

Nigel Farage's Reform UK party won 14% of the popular vote, securing just four seats.

Wood said: "Normally a majority as large as Labour's would guarantee more than one term as government. But Mr. Starmer's majority is not as secure as normal given the voting dynamics."

He said that Labour "will likely need to move fast with policy changes to demonstrate they can deliver their promised changes."

— CNBC's Jenni Reid and Holly Ellyatt contributed to this report.