The UK held a general election yesterday, Thursday. Whilst counting is still underway, it seems pretty clear that the senior coalition party, the Conservatives, will be returned to power. Predictions suggest that the Conservatives will be able to form a government without the support of any other party, holding a small majority over all other parties.
There are several main themes from the election. The junior coalition party, the Liberal Democrats have suffered a bloodbath with 57 MPs prior to the election being reduced to 8 (currently) and senior figures losing their seats. In Scotland, the Scottish National Party (SNP) has enjoyed a landslide win taking 56 from 58 seats – they lost the referendum on Scottish independence last September, of course. The major opposition party, Labour, has failed to make any inroads, being all but annihilated in Scotland, a traditional heartland and failing to take key seats elsewhere in the country.
The upshot is likely to be that the leaders of the Liberal Democrats and Labour parties will both resign in the aftermath of the election. Sterling is rallying on the back of a Conservative win and the stock market is also likely to strengthen since the Conservatives are viewed as being a pro-business party.
On the bigger picture, the UK is to enter a protracted period of uncertainty which will harm business investment and (nearer the time) cause the Pound to slide since a key election pledge of the Conservatives is to offer an “in-out” referendum on Britain’s continuing membership of the EU by the end of 2017. The Conservatives hope to be able to present a raft of EU reforms to the British people before the vote is held which (they hope) will convince the populace to remain within the EU. However, it remains a very dangerous gamble since the EU has long been a popular whipping boy in the media and, consequently, in the minds of many British people. Much of the UK business community is staunchly behind continued membership of the EU and, ironically, had the SNP prevailed in the referendum on cessation from the union they would have wanted to stay within the EU. It remains to be seen what concessions Mr Cameron can win from Brussels to woe UK voters, but it is certain to cause increasing anxiety and uncertainty as an eventual vote nears. It is unlikely that the issue of a vote can be dodged at this stage since it has long been a central plank of the Conservative’s re-election package.