Against all the odds, YouGov’s constituency-by-constituency estimate of voter intentions has predicted the Tories may lose 20 of their current 330 seats, whilst Labour could make a 30 seat gain. This puts the Conservatives just 5% ahead of Labour a drop of 20% in 11 days! So how has this monumental fall from grace happened? Well that’s easy, we’re back to that truck-load of f**k ups mentioned in the title. When Theresa May called a surprise snap election on 18th April, she was on target for a monumental win, with the polls and the bookies predicting a 15-20% increase in seats from their current 330, there was even talk of securing as many as 400 + seats. May was viewed by the public as strong, stable and determined and the public liked her. On the other hand, Jeremy Corbyn, was viewed as incompetent and unelectable. A man that would reduce Labour’s tenuous political influence to fewer than 200 seats.
The pound leapt with joy, rising from $1.25 to $1.29, even briefly breaking $1.30 at one point. Then came the f**k ups. A manifesto obsessed with occupying the middle ground (you can’t please all of the people all of the time, what you end up with is a compromise nobody wants) and a disastrous U turn on the so called dementia tax. On the other hand, Corbyn’s manifesto was relatively good (and no, I’m not here to convince you one way or another). Despite his monumental radio fail the other day, his TV appearances have shown him as calm and able to hold his own, even against Paxman! Now only 2.5m watched this TV interview, as opposed to the 8.5m who watched Britain’s Got Talent, so it’s impact is arguably limited especially given that the sort of people who watched the interviews have probably already made up their minds. None the less, Corbyn has increased Labour’s vote share from 24% on 18th April to the current 36%. Whatever side of the fence you sit on, you have to admit that’s quite impressive. Factor in the concept that there was a time when a large number of voters were too ashamed to admit to pollsters that they would be voting Tory, and it may be that Labour voters feel the same about Corbyn (although I’m not convinced that left-wing thinking is the same as right-wing thinking on this one)
Either way May’s campaign has been disastrous (they must be seriously thinking that they should have stuck with their majority of 17). Where as, Corbyn has run his relatively well (the aforementioned radio interview and Abbott aside). Tory HQ must be pulling their hair out as the pollsters and broadcasters now start talking about the possibility of a hung parliament, with a Labour-SNP or even Labour-SNP-LibDem coalition coming to power (I know they’ve ruled it out, but history dictates that they’re not completely adverse to a U turn). If so, that would be an even bigger upset than Brexit. So what are the chances? If we assume the SNP drops from its current 54 seats to 50, then Labour would need to take over 275 to form a coalition, up 46 from its current 229. An increase of 20% looks fairly insurmountable. The other possibility is a Labour-SNP-LibDem coalition So in this scenario if the Lib Dems gain ten, then Labour would only needs to gain 36. If the Lib Dems got 20, then Labour would only need 26! Whilst it’s not likely, it is within the realms of possibility.
So where does that leave the pound? Well it is falling.
For all Labours leaps forward and the dents to May’s perceived competence, the pound is still trading at $1.28573, not a mile away from where it was when the election was called. On the other hand trading against the euro has been peculiar. It hit a €1.20 high on 18th April but since then it has dropped to its current price of €1.14570. Even when the Conservatives were riding high, it kept falling. The may just be as a result of the euro’s strength or as a result of Brexit but given the faith traders had in Theresa May it does seem strange!
So where does that leave us? In general the currency markets favour a strong government with a strong mandate. And the action of the pound – against the dollar at least – seems to be discounting any other alternative than a Conservative win. However, the nearer we get to the possibility of a hung parliament, the less stability there will be. A progressive alliance coalition would be so unexpected and cause so much turmoil that the pound would plummet. It would mean another referendum in Scotland for the SNP, and probably another Brexit referendum (to get the Lib Dems to the table), which could jeopardise Brexit but bizarrely favour the pound!!! I know it’s confusing! So what’s the summary? The Tories will win and the pound will go up. But this has been a weird 12 months so maybe it’s best to prepare yourself for the unexpected!