What the snap general election means for the pound
Just when you thought it was safe to go back into the water, another national vote comes along.
On 8 June, 2017, there will be a general election.
Here's how it's all going to pan out... I think.
Politics is getting in the way of my to do list
I'm all for direct democracy. And I look forward to technology ushering in a new era, where voters get more say in the decisions that get made, while ushering out our current, antiquated system of representative democracy.
That said, I now seem to spend so much time reading, thinking or arguing about politics that I struggle to get through my daily and weekly to-do lists.
Last week was a prime example. Just as I was getting started on a compelling article about the implications of new taxes for buy-to-let, along comes the prime minister and announces a general election.
Buy-to-let got bumped. Instead, we consider this latest national vote.
Of all the elections I've been through in my life, 2001 aside, the outcome of this one looks the most certain. The Tories are going to win – and by a lot.
Let me stress this is written from about as disinterested a position as is possible. I'm not a Tory, LibDem, or Labour supporter. I did not vote for any of the parties at the last general election. I spoiled my ballot paper. And, by the way, that is quite different to not voting. None of the parties represented my views and I was not given the option to vote for none of the above.
Here are my unbiased observations. First, Ukip looks vulnerable. It no longer has the charismatic, publicity-attracting leadership of Nigel Farage; nor, as far as I understand it, does it have the funds of Aaron Banks. It no longer has the dissident libertarian kudos of Douglas Carswell, and its primary raison d'etre – Brexit – is now in motion.
Not only is Brexit in motion, but Brexit has somehow been occupied by the Tories. Close to 60% of Tory MPs voted Remain – that's where the party was in June 2016 – and the Cabinet was even more Remain-biased, so it's quite some turnaround. But for all that, the Conservative Party has now become the party of Brexit. It's enough to make you cynical.
So, for now, it looks as though Ukip is going to haemorrhage votes to the Tories. I can see that happening even up north in the Labour heartlands, where Ukip had made such inroads. Ukip has about a month to re-brand itself, if it is to save itself.
A dead-cat bounce for the Liberal Democrats
Labour, meanwhile, is going to have a voter haemorrhage of a different kind. Jeremy Corbyn's socialist message is not the message the majority of British voters will vote for – Ed Miliband's failure showed that; yet rather than moderate, the party got more extreme.
Meanwhile, the cacophony of inconsistencies and cock-ups means that, beyond the left-wing echo chamber, Labour has become a laughing stock and any marginal voters will swing another way.
Many moderate, Remain-voting left-wingers will move over to the LibDems, who are currently endeavouring to occupy Remain, just as the Tories now occupy Brexit. Despite the LibDem leader's lack of presence – I don't even know what Tim Farron looks like – I can see the LibDems making gains against Labour and even nicking some Tory marginals.
And so they jolly well should – they have only one way to go after the debacle of 2015. I can see the LibDems now executing the political equivalent of the dead cat bounce, with gains of two or 300%.
As for the Labour heartlands, of course the party will win the vast majority of seats it usually wins, but not by as much as it should. In some cases, I can even see it losing traditional voters to the Tories.
Then we have the SNP. In terms of the number of seats it won, it excelled at the last election. Its success seemed in some way to be a reaction to the Scottish independence vote and there isn't that same bump this time. Meanwhile, I suspect there may be some "Sturgeon fatigue" as well.
The SNP will still win the majority of Scottish seats, but it won't win as many seats as it did last time. I can't see it losing many to Labour – Labour is gone in Scotland now. Most who would have voted Labour will now vote SNP. But I can see it losing some back to the LibDems and even a couple back to the Tories.
Finally, I can't see the Greens being much of a force beyond Brighton. Most of those who voted Tory last time round will do so again, except for a few disaffected, centrist Remainers, who will move over to the LibDems.
Tory Remainers make up a fifth of the electorate. May will know that and she won't let them go lightly. Now that Brexit is occupied, we can expect Tory Remainers to be pandered to. Some will switch to LibDem, but I suspect most will stay with the Tories, given the options open to them. The so-called "Remaniacs" tend to be from the left.
So the parties who will gain most by this will be the Tories. They could easily get in the region of 375 seats – and thus around a 100-seat majority. The other gainers will be the LibDems, who, as the voice of disaffected Remain, could get easily get above the 30 seat mark. I can see Labour even slipping below 200 seats, and the SNP below 50.
The only way is up for sterling
It's early days, of course, and all sorts of things could happen to upset the applecart. We need to see what Ukip is going to do, and I'm hearing all sorts of rumours about an anti-Brexit, Blair-led coalition – probably hogwash, but you never know. Perhaps this is why May called the election now, before any such coalition has time to organise itself.
From an investment point of view we got our first clue as to how all this will manifest shortly after May called the election: the pound rallied. I've long been calling a bull market in the pound and another foundation – a prime minister with a clear mandate and a government with a strong majority – will soon be in place.
So the pound goes higher. There's bucket-loads of resistance on either side of $1.30, but the direction is up. Importers, who have suffered this last year, will benefit most by that.
I'm generally positive about our economy. But it wouldn't surprise me if, once elected, the government allows some much-needed "cleansing" in the form of lower prices, to take place in markets which have previously been "too important" to be left to their own free-market devices. I'm thinking specifically about gilts, interest rates and house prices.
But such worries are a long way down the road. Let's see how Ukip reacts to all of this first.
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