The impact of the UK General Election on financial markets

After having repeatedly suggested that she was not interested in asking the UK voters to give her a mandate as Prime Minister, on 18th April Theresa May announced that there would be a General Election on 8th June. The machinations of contemporary politics mean that so many key announcements are leaked in advance, however this one took markets by complete surprise. Despite this though, could it be that this is one of the most predictable general elections in living memory?  We look at the key factors to be aware of during the campaigning, the polling, the key stances of the major parties and what the outcome could be. We also analyse the reactions on major financial markets and why we should still be concerned by the outcome for the snap 2017 UK General Election.

UK general election

Why is the election being held now?

This can depend upon your political standpoint. Theresa May said that she wanted Westminster to not stand in her way of Brexit negotiations and for that reason, she called an early election. Her opponents claim opportunism with a disruptive and divided Labour Party, in addition to going back on her word. Furthermore, critics also suggest that the part of Westminster standing in her way were actually the hard line Brexiteers on her own backbenches.

Realistically the reasons are varied but are mainly for Mrs May to gain control over her party:

  • The main threat to Mrs May is rebellion from the hard Tory right. With such a small working majority, they are able to hold her to ransom on their demands over Brexit. This is what she is looking to change – to dilute the strength of the hard Tory right in Parliament. The hard-line euro sceptics amongst the Conservative MPs are likely to have their influence diluted if Theresa May can secure a larger majority.
  • The Labour Party has been unable to provide an effective and coherent opposition in the last two years. The chaotic view of Jeremy Corbyn’s Labour and with opinion polls strongly in her favour means that…

 

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