The Osborne factor: Conservative victory no guarantee of market stability

April 27, 2010

A new Reuters poll of business leaders reveals just how nervous they are of political uncertainty at a time when the economy is looking so fragile. Some 90 percent of them believe a hung parliament will stall Britain’s tentative emergence from recession.

Another striking element for those of us pulling together the latest survey was how many chief executives and finance directors want Ken Clarke to be the next chancellor, making it the second Reuters poll in the space of a month to reveal an influential group with serious doubts over whether Shadow Chancellor George Osborne is fit to hold the country’s tattered public purse.

All of which means that even if markets and business get what they want on May 6 – a Conservative victory – there is no guarantee of an end to the political uncertainty that has set sterling and gilts off on something of a roller-coaster ride. We’ll get a further update on what economists think with the latest Reuters poll on Wednesday.

In the meantime, is there anything Osborne can do to convince voters and business that he has what it takes to hold the keys to Number 11? If not is there any conceivable way David Cameron can do what executives and City economists clearly want and ditch Osborne in favour of Clarke?

Or perhaps a happy compromise would be to settle market nerves by giving Clarke a more high profile, supervisory role in any new government than he is currently destined for. After all, the chief executive of the biggest firm – and one of the country’s biggest employers — in our survey of company bosses said he felt Clarke was not only the best potential chancellor but also his pick for prime minister.

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