When Theresa May called the snap election back in April, little did she know the chaos that would ensue. A resurgent Labour party, bolstered by a disenfranchised younger generation, saw a significant shift in the electorate away from ‘austerity’. What happens next is difficult to predict. With Mrs May forming an informal coalition with the DUP, a party whose politics generally align with her own, she is able to form her much needed (and once thought guaranteed) majority.
But what does this shift to the left mean for the future of a Tory-led Government? Has Theresa May made her own position untenable in the process? Only time will tell, but it may bring further political unrest and potentially another election in several months’ time.
What it means in the immediate future is that we have a Government, a functioning one, and a strong opposition. This is arguably good for UK politics in the long term, although it may seem chaotic now. The main concern is the impact on our Brexit negotiations. The point of this election was to make our case stronger, but it has in fact made it far more flimsy, and the political fallout is likely causing the halls in Brussels to ring out with laughter.
Markets are where this uncertainty is being hit the most, with Sterling falling immediately after the exit poll was announced last night. However, the FTSE 100 is up today, highlighting how a weak pound is good for exporters and global institutions. This is likely to be a short-term effect, but the continued uncertainty about what policies this new coalition Government will look to implement (away from the Brexit negotiations) mean that markets may well be more volatile for several months.
As more becomes clear over the coming days, weeks and months, we will continue to keep you posted about how this affects you and your employees.