{"id":70971,"date":"2015-04-13T05:07:33","date_gmt":"2015-04-13T09:07:33","guid":{"rendered":"http:\/\/countingpips.com\/?p=70971"},"modified":"2015-04-13T07:27:50","modified_gmt":"2015-04-13T11:27:50","slug":"the-7-possible-outcomes-of-the-u-k-election","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/04\/the-7-possible-outcomes-of-the-u-k-election\/","title":{"rendered":"The 7 Possible Outcomes of the U.K. Election"},"content":{"rendered":"
April 13, 2015<\/div>
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By WallStreetDaily.com<\/span><\/a> \"U.K.<\/p>\n

By Martin Hutchinson<\/a>, World Banking Analyst <\/em><\/p>\n

Britain has had a pretty good five years under the coalition government led by David Cameron of the Conservative Party.<\/p>\n

So with the U.K. general election coming up on May 7, it means Cameron is a fairly safe bet for re-election, right?<\/p>\n

Far from it!<\/p>\n

In fact, five parties are contending for the English vote: 1) the Conservatives, 2) the leftist Labour Party (led by Ed Miliband), 3) the Liberal Democrats \u2013 which currently form the coalition government with the Conservatives, 4) the U.K. Independence Party (UKIP), and 5) the Green Party.<\/p>

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In Scotland, the Scottish National Party (SNP) is a major factor. And five further parties in Wales and Northern Ireland will gain a few seats.<\/p>\n

It\u2019s a very tight race.<\/a> But the one result that appears more and more unlikely is a solid Conservative majority \u2013 even in alliance with the Liberal Democrats.<\/p>\n

And that means upheaval is imminent\u2026<\/p>\n

Cameron on Shaky Ground<\/h2>\n

Currently, opinion polls have the Conservatives and Labour on equal ground. Yet each party only has about 34% of the vote. That\u2019s below the 36% that Cameron won in 2010 \u2013 which wasn\u2019t enough to give him a 326-seat majority of the 650 parliamentary seats.<\/p>\n

Indeed, if that percentage were repeated exactly, according to the political website YouGov\u2019s \u201cswingometer,\u201d Labour would be close to a majority, with 317 seats, while the Conservatives would have only 288. (There is a bias in the system towards Labour. Since the constituency boundaries were set a decade ago, its average inner-city constituency has shrunk and now has far fewer voters than the average Conservative constituency.)<\/p>\n

Cameron\u2019s biggest problem is the emergence of UKIP, whose two major issues \u2013 a clampdown on immigration and withdrawal from the EU \u2013 have drawn considerable support from older voters who might otherwise vote Conservative.<\/p>\n

UKIP, not a factor in 2010, is now running at about 13% in the polls. That puts it in third place. And it\u2019s well ahead of Cameron\u2019s coalition partners \u2013 the Liberal Democrats \u2013 who have about 8%. There is a moderate offsetting factor in the rise of the Greens to about 7%, who take most of their votes from Labour.<\/p>\n

Now, neither UKIP nor the Greens will get many seats \u2013 maybe 10 to 15 between them. But in Britain\u2019s \u201cfirst-past-the-post\u201d electoral system (similar to that for the U.S. House of Representatives), the recent strong groundswell of support for UKIP will push many traditional Conservative seats to Labour.<\/p>\n

If UKIP didn\u2019t exist, the Conservatives would be well ahead in the polls and coasting to victory \u2013 but that\u2019s wishful thinking at this point.<\/p>\n

According to YouGov, the Liberal Democrats will get crushed \u2013 falling 57 seats in 2010 to just 17 \u2013 while all other parties will combine for 27 seats.<\/p>\n

However, there is one major flaw in the computer\u2019s calculations \u2013 it treats the whole country as one single unit.<\/p>\n

Now, in England, Wales, and Northern Ireland, that\u2019s approximately accurate. The three to four Welsh Nationalists normally align with Labour, and the four Northern Irish parties split their 17 seats fairly evenly among the main parties.<\/p>\n

But this time, Scotland is likely to throw a major wrench into the works\u2026<\/p>\n

William Wallace Would Love This Party<\/h2>\n

With a population of 5.3 million (8.4% of Britain\u2019s total), Scotland has 59 seats up for grabs \u2013 and a strong SNP is ready to shake up the election in a big way.<\/p>\n

In 2010, the SNP got only 1.7% of the total British vote (but about 20% of the Scottish vote), and six parliamentary seats in the House of Commons. This time, the SNP is likely to get close to 50% in Scotland.<\/p>\n

Now, that\u2019s still only 4% of the overall British vote, below the projection for the Greens. But crucially, it would give them at least 30 Scottish seats, almost all of them at the expense of Labour.<\/p>\n

That would snatch away Miliband\u2019s projected almost-majority of 317 seats, taking him down to, say, 290. So instead of being in a very strong position, where he\u2019d be able to choose between the centrist Liberal Democrats and minor parties (maybe the Greens) to form a government, not only would he be forced to enter into negotiations with the SNP that just crippled him, he\u2019d still<\/em> be short of a majority.<\/p>\n

As for Cameron\u2026 he\u2019d be in an even worse position. He\u2019d no longer benefit from the cozy coalition with the Liberal Democrats. Plus, the SNP is economically left of Labour\u2026 and thus unlikely to back a Cameron government.<\/p>\n

The possible permutations are as intriguing as they are head-spinning!<\/p>\n

The likely outcomes will depend on tiny fluctuations in the polls between now and May 7. Sheer dumb luck will also play a part when it comes to the quality of the candidates in a number of seats that could go either way.<\/p>\n

So what\u2019s going to happen?<\/p>\n

What\u2019s in Store on May 7<\/h2>\n

Let\u2019s review the potential scenarios, starting with the result that would be the most investor-friendly\u2026<\/p>\n

U.K. Election Outcome #1:<\/strong> Stable One-Party Conservative Government.<\/strong> This is what would have been expected before 2010 with no UKIP. But UKIP\u2019s rise means this is very unlikely to happen now.<\/p>\n

U.K. Election Outcome #2: Conservative-Led Coalition \u2013 With UKIP, the Liberal Democrats, or Both.<\/strong> There\u2019s probably less than a 50-50 chance of this happening. This scenario also faces the additional difficulty that the Liberal Democrats and UKIP agree on almost nothing. The Liberal Democrats like both the EU and immigration, whereas UKIP is against both. So even though the three parties may have a majority between them, no deal may be possible.<\/p>\n

U.K. Election Outcome #3: Conservative-Labour Coalition.<\/strong> In Germany, this would be the obvious outcome, but not only are they Britain\u2019s two main parties, Cameron and Miliband are also philosophically far apart. And any such government would run the risk of becoming unpopular and splintering British politics even further.<\/p>\n

U.K. Election Outcome #4:<\/strong> Complete Chaos.<\/strong> Neither Cameron nor Miliband are anywhere close to a majority, and can\u2019t agree on how to form a government with others. So any other coalition would require three or four parties. The fractured nature and lack of leadership from that many parties would probably lead to a quick collapse. Since 2010, Britain now has fixed, five-year Parliamentary terms, so they\u2019d have to change the law to have another election quickly. If they couldn\u2019t do that, Britain would suffer five years of chaotic, short-lived, minority governments \u2013 like the French Fourth Republic or pre-1994 Italy.<\/p>\n

U.K. Election Outcome #5: Labour-Led Coalition \u2013 With the Liberal Democrats and Possibly Green Party.<\/strong> This is pretty unlikely without the SNP, but the Liberal Democrats would tend to moderate Labour\u2019s economic policies.<\/p>\n

U.K. Election Outcome #6: Stable One-Party Labour Government.<\/strong> \u201cRed Ed\u201d Miliband is to the left of his party, which has itself moved to the left since the Tony Blair years. So this would be fairly business-hostile. It\u2019s also fairly unlikely, based on the figures above and rise of SNP in Scotland \u2013 which will take seats away from Labour.<\/p>\n

U.K. Election Outcome #7:<\/strong> Labour-SNP Coalition. <\/strong>An arrangement like this would be even more business-hostile than Labour alone, and would create one problem: The SNP wants Scottish independence from the main Westminster system \u2013 but if it got it, the SNP itself and the Scottish Labour MPs would disappear, thereby removing the U.K. government\u2019s majority.<\/p>\n

Bottom line: The British economy is in pretty solid shape. But this election puts it at a crucial juncture. If outcomes #4 through #7 are reached, the upheaval and uncertainty would undoubtedly cause it to stagger. For investors, the London stock market is already quite high, but it could flirt with even higher levels if these outcomes are avoided.<\/p>\n

Good investing,<\/p>\n

Martin Hutchinson<\/p>\n

The post The 7 Possible Outcomes of the U.K. Election<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com By Martin Hutchinson, World Banking Analyst Britain has had a pretty good five years under the coalition government led by David Cameron of the Conservative Party. So with the U.K. general election coming up on May 7, it means Cameron is a fairly safe bet for re-election, right? Far from it! In fact, […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-70971","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/70971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=70971"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/70971\/revisions"}],"predecessor-version":[{"id":70982,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/70971\/revisions\/70982"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=70971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=70971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=70971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}