The results are in and we have a hung parliament.
Theresa May’s plan backfired. If the Conservatives increased their majority May would be hailed as a hero. If Labour won May could have faded into the background with her tail between her legs. But the grey zone of a hung parliament will be a headache for everyone involved.
Hung Parliament History
In 1910, 1923, 1929, 1974, and 2010 – a general election failed to produce an outright victory for a single party. On five of these occasions, minority government followed; the exception was the Conservative-Lib Dem coalition that took office in 2010.
Labour have already stated that they want to form a minority government. While the Conservatives are in discussion with the DUP.
Uncertainty with Ever Step
All markets abhor uncertainty and the GBP is the fasted reactor to uncertainty. Overnight the GBP crashed to a seven-month low against the Euro.
“Domestically-oriented companies are likely to be volatile because the path of domestic policy is now very opaque. As seen after the UK referendum, the weakness in currency is likely to be at least a short-term boost to those companies generating earnings from overseas and this is what the market is initially indicating. Overseas earners also benefit from exposure to the recovering global economy, which means they have better visibility.” James Illsley, JP Morgan Asset Management.
A small majority could lead to a more open dialogue with Brexit. It could also stall negotiations due to cross-party fighting.
“The chances of the [Brexit] negotiations breaking down without a deal are now much higher.” Martin Beck, Oxford Economics.
As the Brexit clock ticks ever louder, will domestic issues be put on the backburner?
“This result has added confusion into what was already an uncertain time. But I remain solidly confident that the UK’s place as a global leader in tech and innovation is secure.” Gerard Grech, Tech City UK.