Investors should strap themselves in for a rollercoaster ride in the weeks leading up to General Election 2019.
Although the early polls give Prime Minister Boris Johnson and his Tories a 15 point lead, there’s a lot of ground to cover before December 12 and the gap between Jeremy Corbyn’s Labour could easily close or reverse by the big day.
Recent votes have literally split the country in half, with the Brexit referendum returning a narrow 52% to 48% Leave majority.
Parties have struggled to gain a majority in Parliament since 2010, which led to the Tory/LibDem coalition, and there’s every reason to think Election 2019 could go the same way and deliver another hung Parliament.
That’s the view of investment guru Nigel Green, CEO and founder of deVere Group, a leading global independent financial adviser.
Volatile pound
“This is a critical stage in the slow-moving, damaging, torturous Brexit saga,” he said.
“Expect the pound and UK financial assets to be increasingly volatile in the run-up to the general election, given the wide-ranging set of outcomes.
“The most detrimental of these outcomes for sterling, UK financial assets and the wider British economy, include another hung parliament or a victory for Jeremy Corbyn’s Labour party.”
“Boris Johnson’s intention to secure a majority within the House of Commons is by no means guaranteed.
“The Brexit Party will use the fact that Mr Johnson did not deliver Brexit by October 31 – something on which he staked his whole premiership.
“The Remain vote could also be split between Labour, the Lib Dems, the Greens and the SNP.
“Political fragmentation on this scale has never happened before in the UK.
Hung Parliament
“Therefore, a hung parliament looks like an alarming possibility, meaning there could be no majority to quickly and smoothly resolve the Brexit chaos.
“Should grinding deadlock continue, the UK economy would still haemorrhage investment and confidence. The fallout of Brexit has cost the UK three and a half years of lost opportunity and many, many tens of billions of pounds. This would only intensify with another hung parliament.”
Green also fear the impact of Corbyn’s ultra-Left manifesto may have on the economy.
He has already hit out against ‘the elite who run a corrupt system’ and promised to crackdown on ‘tax dodgers, dodgy landlords, bad bosses and big polluters’.
“Should he win this election, his anti-free-market policies – such as the re-nationalisation of industries from utilities to railways to postal services, and the forcing of companies to give 10% of their shares to staff – plus his high-tax policies, including a possible wealth tax, will spook the financial markets, hit long-term sustainable growth of the British economy, put more pressure on UK financial assets, and lead to a significant sell-off of the pound,” said Green.
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