Theresa May weakens herself and her country with a gamble gone wrong, argues Christianah Babajide.
Snap Election Result
On the 8th of June, Britons flocked to polling stations to vote in the most important general election in UK history. However, Westminster received an inconclusive result i.e. hung parliament. (A hung parliament means no political party has enough seats to secure a majority in Parliament.) An election that was supposed to cement May’s leadership of party and country, and reassure the EU that it had a strong and stable partner for the forthcoming Brexit talks, has done nothing of the sort. Instead, it has plunged Britain into political chaos. It has forced the hand of the Conservatives, who lost its majority in the House of Commons, to team up with Northern Ireland’s Democratic Unionist Party (DUP), who have now found themselves in the position of ‘kingmakers’, to prop up the Tory government.
But how did Great Britain get into such a sticky situation? Well, on the 18th of April, May called for a snap election, despite promising she would not, to strengthen her hand in Brexit talks. She hoped to obtain an increased majority in Parliament to grant a strong mandate to negotiate a ‘hard Brexit’ thus leave the single market and press ahead with cuts to immigration. However, much like the election result, the snap decision was unexpected as there wasn’t meant to be another election for years – May 2020, to be exact. Post-election chaos, ABC News correspondent Steve Cannane said Mrs May’s authority has been undermined by this result, “It undermines her authority in the party, it undermines her authority in the view of the electorate and it undermines her authority if she’s to negotiate leaving the European Union.” The general election result has given rise to an additional layer of complexity.
Stock Markets Reaction; Painful or Promising?
Pre-election, City analysts predicted that; FTSE 100 foreign currency earning stocks would weaken as sterling rallies while UK-focused stocks would rally as prospects for the economy improve. However, the reverse was the case as FTSE 100 soared above 7,5000 points when the London stock market opened following the result of a hung parliament. This is because, while the pound’s fall is bad for UK companies, the FTSE 100 is mostly made up of multinationals that benefit from the slumping sterling. For large FTSE 100 companies, over 70% of their earnings is outside the UK. Jason, Holland Managing Director of Investment Management explains; “When the pound weakens and the businesses convert their profits back into Sterling, the weaker pound makes those earnings go up in pound terms, hence why the FTSE 100 is responding well to the snap election results.”
However, the post-election calamity sent the UK domestic stock markets into a tailspin; the FTSE 250, took a hit the morning following the election, as shares fell by around 0.5%. The shocking result led to banks and housebuilders suffering badly, with Lloyds Bank, RBS and Barclays subsequently trading down. The market which was already positioned for a Tory party majority saw the pound slump to a fresh seven-month low against the euro. FTSE 250 companies and Investors were unprepared for this outcome thus their overall outlook for UK growth remains negative as they fear there’s worse to come. David Madden, of CMC Markets, said: “Traders despise uncertainty and that is exactly what we have got because of the outcome of Thursday’s general election. By delaying the Queen’s speech, the UK is sending out a message of instability, when it badly needs clarity.”
Conservatives & the DUP: A Coalition of Chaos?
Theresa May refuses to resign as Prime Minister, which some feel is the honourable thing to do; instead, she plans to form a working majority with the support of the DUP. However, the DUP have extreme socially conservative views and have campaigned against: same-sex marriage, LGBT rights in Northern Ireland and women’s abortion rights. Ian Paisley Jr, son of the party’s founder, has previously called homosexuality, “offensive and obnoxious” and said he was “repulsed” by homosexuals. The public’s outrage at DUP’s controversial stance, coupled with growing anger over Grenfell Tower fire sparked marches and protests outside 10 Downing Street, with waving placards reading, “Kick the Tories Out” and “Pray the DUP away.” Thousands rallied outside Whitehall in London to protest the alliance, criticising May for climbing into bed with the homophobic party, to cling onto power.
Despite being cautioned against the deplorable DUP deal, she is determined to form a ‘strong and stable’ government, however, her slogan couldn’t be any less true; ‘febrile, chaotic, and uncertain’ bear more relation to the atmosphere in Westminster; delay in Brexit talks cause further uncertainty and we’ve had the Queen’s speech delayed for the first time in history. The only certainty in this messy situation is that the UK is leaving the European Union.
In a live election cast on BBC Radio, ex-PM and outstanding leader of Conservatives, Sir John Major warned the government to be cautious because of peace process reasons. “A fundamental part of the process is being impartial; the danger of being locked into a parliamentary deal is the UK cannot be impartial. Impartiality may be crucial in the future and distrust in government would only add to the uncertain climate.” As May attempts to put her best foot forward, she should be aware the cost of this coalition government may come at a high price, with expensive concessions.
Brexit Negotiation Talks
As the pound weaken; economists fear households will suffer from rising inflation, damaging their growth forecasts. Businesses which import components and raw materials will suffer, retailers will also feel the pinch, particularly when importing foodstuffs from abroad. It also makes the UK less attractive for foreign workers as their wages in sterling now translate to rather less than in their home currency.
However, the election result does not reverse the referendum result. Considering the UK’s uncertain position and outcome of the election, a ‘soft Brexit’ is more likely. Experts say a soft Brexit could include a request to remain inside the EU single market or the customs union, which entails implementing all EU laws related to the single market, including free movement of people. Even Nigel Farage, former UKIP leader and Vote Leave campaign leader, has expressed his preference for a Norway model, stating that a “soft Brexit is a new reality.”
City analysts predict sterling would fall further with the risk of hard Brexit and Capital markets would become very volatile. Arlene Foster, the leader of the DUP, previously stated that “No-one wants to see a hard Brexit”. With this, it is likely the DUP will ensure there is no hard border with the Republic of Ireland following Brexit.
This election has impeded Brexit, smothered the Conservatives and left a nation divided; how will we stand? Brexit negotiations have begun, more than ever, Britain needs visionary leadership but is left with no one left in charge. Ergo, for now, it is Theresa May who will steer the British ship through murky, uncharted waters. A period of confusion lies ahead, the markets will react accordingly and negatively, threatening the UK’s credit rating, however, the people of Great Britain must Keep Calm and Carry On. It is possible to find the beauty amongst the chaos; with the youth vote seeing a 72% turnout in the election, Millennials shaped the political landscape. Their active participation left a “youthquake” in Westminster, which denied Tories their expected landslide result, humiliating May with a hung parliament. Despite the disappointing result, this is very much a personal triumph for Jeremy Corbyn and his party.
Christianah Babajide is a young canvasser in the London Borough of Barking and Dagenham. When she’s not campaigning, she’s studying for her law degree at The City Law School.
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