Analysts cast their votes on UK election outcome

Experts from a range of disciplines have been expressing disquiet about the hung parliament that has resulted from Thursday's general election in the UK.
Among the subjects they have been commenting on are:

Economy

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said, “The economy's resilience immediately after the Brexit vote last year suggests the link between political uncertainty and economic activity is not overwhelmingly strong.“Still, the inconclusive election result will be an unhelpful influence at a time when quarter-on-quarter GDP growth already has dropped this year to 0.2 per cent, the slowest rate in the G7.“The chances of the MPC (Bank of England's Monetary Policy Committee) cutting interest rates again in response also are slim, given that inflation is above the two per cent target and is on track to exceed three per cent later this year.”Martin Beck, lead UK economist at Oxford Economics, said, “The prospect of a prolonged period of domestic political uncertainty risks weighing on economic activity, although the performance of the economy following the EU referendum suggests that the threat from this source shouldn't be overblown.“But the political impasse the UK finds itself in does have major implications for Brexit. Another election would take a big chunk out of what is already a very tight timetable for Article 50 negotiations, meaning that the chances of the negotiations breaking down without a deal are now much higher.“And there is no guarantee that a second election would be any more conclusive than the first, raising the chances of a prolonged period of political paralysis.”

Brexit

Kit Nicholl, Western Europe analyst at IHS Markit, said, “IHS Markit assesses that the hung parliament is likely to worsen the Brexit-driven slowdown in day-to-day policymaking in the UK parliament. The Conservative government would be unable to effectively implement policies or indeed agree on Brexit strategies that lack unanimous support or a large intra-party majority.“This would mean that the prime minister would face the need for regular and potentially long-winded compromises on her policy priorities, frequently having to garner at least partial opposition support.“The Conservative government's limited power in parliament is likely to delay Brexit negotiations. PM May could be forced into a more volatile and unpredictable negotiation strategy due to the difficulties in gaining domestic parliamentary support on contentious issues such as the UK's final EU budget contributions.”Lucy O'Carroll, Aberdeen Asset Management chief economist, said, “History tells us that hung parliaments are not durable, let alone with Brexit looming large. A request to pause the Brexit negotiations may be one possibility, but it's not clear how that would work as there's no precedent. Either way, this result looks to strengthen Europe's hand in the negotiations.”

Employment

Samantha Hurley, director of operations at the Association of Professional Staffing Companies (APSCo), said, “It seems that Theresa May’s gamble on calling a snap election hasn’t paid off and it is unfortunate that this result does not offer the level of stability that the UK desperately needs. In light of this uncertainty, the next government should be especially careful to avoid knee jerk changes to taxation, employment regulation or visa controls associated with our exit from the EU.“The impact of this result on both the permanent and flexible labour markets has the potential to be significant. Ever since the phrase ‘gig economy’ was coined, media attention has consistently focused on lower skilled and lower paid workers and we are absolutely determined to ensure that the new government recognises that professional independent flexible talent is not only a completely distinctive group within the gig economy but that it also has a critical role to play in the future success of the UK plc. We hope the new administration will be open to working closely with us to ensure collateral damage is kept to a minimum.”Peter Cheese, chief executive of the HR organisation CIPD, said, “This election was called to provide the next government with a strong mandate to take us through Brexit but this morning we face yet more uncertainty. In order for the economy to remain resilient it’s vital that we have a working government that brings the UK the stability it needs at this crucial time.“Brexit negotiations are high on the agenda and how these now move forwards will be a critical area of discussion. However, there is of course a much wider agenda that we need the new government to deliver on as was clear through the public debates. A key focus must be on addressing workplace issues through a much more human lens.“By focusing on improving transparency in business, protecting and raising awareness of rights for workers and boosting investment in skills, we can hope to ensure that work can be a force for good, regardless of how, when and where people work. We look forward to working with the new government once it has been officially formed, to address these issues and ensure the UK is in a strong position to be a high-skills, high-value economy.”

Business

Enrique Garcia, a specialist in employment law at business support provider ELAS, said, “Parliament is due to meet for the first time on June 13 so the Conservatives will need to have a plan in place by then. The next big date is June 19 when the date that Brexit talks are supposed to start as well as the Queen's Speech. This is the big test that will show if the government has enough votes to get its programme of proposed new laws passed.“Accordingly, it is unclear what this means for business and employment law.  It is not clear what policies the Conservatives will need to drop in order to get the DUP on side or whether they will continue their policies in full and hope to garner support from other parties in order to squeeze them through parliament.  Despite the political excitement as how this will pan out, for business and employment law the future is uncertain and quite literally anything can happen. Watch this space.”

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Property

Nick Leeming, chairman of estate agents Jackson-Stops & Staff Chairman, said, “The UK was promised a period of stability but today’s announcement provides anything but at this stage. All markets abhor uncertainty and the housing market is no exception. The priority now must be for politicians to provide reassurance by forming a government as quickly as possible.“The housing market has already been the recipient of doom and gloom in the news this week and certainty is now required to inject confidence and increase fluidity across all levels. “With Gavin Barwell (the housing minister) gone, it will be interesting to see what happens to the long awaited Housing White Paper that disappeared from the scene since its publication in February. Regardless of how the government is formed, it is clear from each of the main political parties’ manifestos that housing is a priority and so a clear strategy must be put in place to tackle the problems of supply, high transaction costs and affordability.”

Sterling

Richard Berry, founder of the currency specialists Berry FX, said, “The pound dived sharply overnight when the exit polls came in and has been stumbling through a wasteland ever since. What should have been a coronation for the prime minister, and a sustained boost for the pound, has turned into a political and economic Mayday.“The markets opened on Friday exactly where they didn’t want to be — with a huge cloud of doubt hanging over both Britain’s political future and the course of Brexit.“Opinion polls correctly predicted that Theresa May’s dreams of a decisive mandate were coming unstuck, so while this is an unwelcome result for the markets, it is less of a tectonic shock than that of the Brexit referendum.“There are so many variables in play that the pound could even rise in the days ahead as the likelihood of a soft and more palatable Brexit increases. As perverse as it seems, political chaos could ultimately translate into sterling strength.”

Pensions/ Social Care

Sir Steve Webb, a former pensions minister and now director of policy at Royal London, said, “A minority government will struggle to pass any major reforming legislation which creates gainers and losers.“Reforming the funding of social care will almost certainly be kicked into the long grass as will any big shake-up of pension tax relief.“If the Conservatives are relying on the DUP for a majority, even policies such as ending the triple-lock or means testing the winter fuel payment will be called into question.“The most we are likely to see is further tinkering as the government looks to fill its budget shortfall with further salami slicing of pension tax relief for higher earners.”For related news and features, visit our Leadership and Management section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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