Insights from the UK and beyond
Anything can happen in UK election – and probably will
We hosted a fascinating debate this morning on the implications of a hung parliament for business and markets. British Banking Association Chief Executive Angela Knight, a former Conservative MP; Jefferies Chief Financial Economist David Owen; parliamentary expert Philip Cowley; and pollster Bobby Duffy of Ipsos MORI were the panellists and the debate covered everything from the possibility of Prime Minister Clegg (Knight’s verdict: “the sort of person you’d like your daughter to bring home to marry, but you really don’t want him running the country”) to fears over the double whammy on May 7 of an unclear result and no resolution over a Greece deal.
The key message was not reassuring for voters and markets: anything can happen. As our marginals poll earlier this week showed, nearly half of all voters in key seats (as nationally) have not yet made up their mind definitively about who to vote for in the general election on May 6 — that’s the double the normal level at this stage of the campaign. The upshot is that you could see a major shift in opinion polls in the final week’s campaigning.
After that, none of the possible scenarios seem likely to offer the markets much immediate reassurance. Even if the Conservatives do get an absolute majority, it is likely to be only a few seats and that could leave it almost as vulnerable as a minority government. If they don’t get a majority, an explicit Lib-Con coalition is possible, although Lib Dem support for a Conservative-led minority government seems more likely as it’s easier and quicker to achieve. But a Lab-Lib deal is also on the cards if the Lib Dems decide to sacrifice popularity for a chance to push through electoral reform.
One thing that will be very interesting is who ends up as Chancellor. George Osborne is seen by many as the Cameron team weak link. Reuters polls this week showed that CEOs and economists alike would prefer the experienced Ken Clarke over Osborne. “In terms of the City, George Osborne and his team do not have huge standing in the financial markets,” said Owen. Duffy called it “one of the great mysteries of the campaign. Our polling tells us Osborne is unpopular, so not sure why he hasn’t been moved to another role.”
Given the poisoned chalice the next Chancellor will inherit, Osborne might be glad not to be the next resident in No.11 Downing Street.