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22 Apr 2015
UK political uncertainty might continue for many more weeks – ING
FXStreet (Barcelona) - The Team at ING comments on the UK elections, noting that political uncertainty could continue well beyond elections and weigh on GBP, and drag consumer and business confidence lower.
Key Quotes
“The UK has been politically stable in recent decades. However, the prospect of a very narrow majority for the next government raises the possibility of votes not passing in Parliament.”
“In order to prevent this, legislation would probably need to be drafted under consultation with opposition parties in order to get it voted through. It works in other countries and could work in the UK – remember that few thought the current coalition government would last the full 5-year term back in 2010.”
“However, we could experience political gridlock. Under the Fixed Term Parliaments Act the next election is scheduled in five years’ time. However, should two-thirds of MPs vote in favour, a new election can be called ahead of that date. Alternatively, if the government loses a confidence motion, opposition parties can try and form a coalition, but if this is not possible within 14 days then new elections would be called.”
“This means that political uncertainty could continue for many more weeks. This could drag consumer and business confidence lower, reducing the prospects for investment and consumer spending and makes it more likely that the Bank of England delays tightening monetary policy. Such an environment would clearly weigh on sterling.”
Key Quotes
“The UK has been politically stable in recent decades. However, the prospect of a very narrow majority for the next government raises the possibility of votes not passing in Parliament.”
“In order to prevent this, legislation would probably need to be drafted under consultation with opposition parties in order to get it voted through. It works in other countries and could work in the UK – remember that few thought the current coalition government would last the full 5-year term back in 2010.”
“However, we could experience political gridlock. Under the Fixed Term Parliaments Act the next election is scheduled in five years’ time. However, should two-thirds of MPs vote in favour, a new election can be called ahead of that date. Alternatively, if the government loses a confidence motion, opposition parties can try and form a coalition, but if this is not possible within 14 days then new elections would be called.”
“This means that political uncertainty could continue for many more weeks. This could drag consumer and business confidence lower, reducing the prospects for investment and consumer spending and makes it more likely that the Bank of England delays tightening monetary policy. Such an environment would clearly weigh on sterling.”