By calling a surprise June election, Theresa May is looking to gain her vote as leader, and stabilise control by locking in an extra two years for the Conservatives to steer Britain through Brexit, as the following election may not fall until 2022.
Sterling took the news of a snap general election positively, focused on the likelihood of a stronger mandate for the Tory Government, and so stability in the longer term. The pound today (18th April 2017), hit its highest level against the US dollar since the beginning of last December.
Unlike the drawn-out US model, our elections will have a short-term distraction, and all should be done and dusted once the dawn rises on 9th June. Not perfect, but we do have a more robust system where the populist vote matters a little more than the geographic distribution.
In the media-rush post the announcement, there will be much speculation. Do we still believe that Labour has no teeth, and the other parties will have no mandate? It will also inevitably throw another curve ball into the Scotland/UK debate, and other distractions that may follow. However, unlike the shock of Brexit, and the madness of Trump – is this to be an election on the lines of “business as usual”, or are such things no longer to be expected from the electorate?
If Ms May gains strong support from the electorate, it must strengthen the UK’s position in the Brexit negotiations. In terms of timing this also falls well, given the French election and then the German polls to be had domestically later this year. With the summer recess to follow all of that impending activity – will Brexit be delayed? Probably not unduly.
The hard, soft or medium Brexit strategy will be an election hot potato. The country has made its move to exit Europe, it will be on the next Governments shoulders to see if by extending the window to 2022, we will be anywhere close to being self-determined, yet gaining access to a level playing field for trading with our European partners. There is an awful lot of euro-spaghetti to unravel and infrastructure to rebuild domestically to make this a good solution for business. Then again, global politics may throw further spanners into the economic picture and the pound too is likely to react further – albeit maybe for the time being we have now seen it plateau and not expect to fall any further.
One thing is for sure we will have many bumps in the road – and to assume we will get off to a flying start under a stronger conservative majority is being far too dismissive of “business as unusual”.
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