Some notes on the UK general election

Some notes on the UK general election

I was in London at the time of the general election that was held in the UK last Thursday, and I’ll be spending a bit of time in London over the next 12 months - so I thought I’d provide some coverage from the ground over here.

The result of the election was an extreme disappointment for Prime Minister Theresa May and her Conservative Party, which lost 13 seats and saw Labour gain 33 seats after the unnecessary poll was dragged forward by three years.

Britain is continuing to experience a political hangover from David Cameron’s five-year old promise to allow a referendum on the subject of an exit from the EU, and Theresa May’s installation as ‘pro-Brexit’ PM in mid-2016 now seems more arbitrary than ever. 

While Theresa May’s election campaign was poorly-managed and mistakenly run on the supposed tailwinds of Brexit euphoria (and not much else), equally it prompted populist politics from Labour, whereby leader Jeremy Corbin quickly realised the polling power of making political promises that sounded great to some (without there being time to properly analyse their costs & merits) and raced to the finish line with a lot more confidence than where he began the race.

Under Theresa May the UK has continued to talk tough on Brexit, but that can probably stop now that the election has passed.

The EU is ready for the UK to leave, whether the terms end up being good or bad for either side. It is costing both the EU and the UK political and business capital to wait and see what the result is, so there’s really no reason to be preaching ‘tough deals on Brexit’ any longer.

Europe is ready to get on with it, and so are British businesses and global businesses that are based in Britain. 

So this election did not achieve its goal of empowering the Conservative party over Labour, and it obviously didn’t increase party support for the Conservative leader Theresa May. However, it may well force a leadership change and I believe that there is strength to the rumours that pro-Brexit supporter and former London Mayor Boris Johnson is campaigning internally to run the party.

Aside from being extremely charismatic, he has a blend of pro-business, pro-Britain and liberal ideals that would probably make for an interesting twist for Britain, both politically and economically.

The British Pound (GBPUSD) has been range-bound between US$1.20 and US$1.30 since October last year, and the election result hasn’t made that much of a difference when looking at the medium-term.

Similarly, UK equity markets seemed not to care one way or the other and thus it is business as usual in Britain, which has gotten used to the political and economic uncertainty of Brexit.

In that regard, it’s probably fair to say that things can’t get much worse as far as uncertainly in the UK is concerned so maybe it’s time get bullish over here.

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