A hung parliament now means that the Conservative Party must seek a coalition partner in order to form a government, with talks in progress with the Democratic Unionist Party (DUP) of Northern Ireland.
It is still early doors and the story is developing but we’ll attempt to answer some of the pressing questions for investors, business and landlords as we try to predict what to expect over the coming weeks.
Who will be the new government?
As it stands, the Conservatives, led by Theresa May will once again go back in to government but, crucially, they need the support of another party after falling short of an overall majority.
With there being a total of 650 seats in the House of Commons, any government seeking to rule with a majority of MP’s must have 326 seats under their control; the Tories have 318 seats, 8 short of an overall majority.
This has meant that Theresa May is now seeking to form a government with the DUP, led by Arlene Foster. But who are the DUP? They hold a majority of 10 Westminster seats in Parliament for Northern Ireland. In terms of their politics, they have a track record of trying to block gay rights legislation as well as access to abortion for women.
Will they last?
Quite honestly nobody knows for sure but most seem to agree that the chances are very slim. Theresa May has been fatally wounded it would seem by her absolutely disastrous night, and Brexit negotiations are set to begin within days.
You’d have to expect that not only are the knives out within her own party but that European negotiators are now rubbing their hands with glee that they are about to hit the negotiating table with a Prime Minister who quite obviously doesn’t have the backing of her people.
In addition, it is worth considering the unhappy right-wing of her party which will now suspect that their version of Brexit has been shot down. It is not difficult to see negotiations going so badly that the prospective government collapses.
What is happening with Brexit?
The reality is that the British people appear to have overwhelmingly rejected the Tory vision for a so called ‘hard Brexit’, involving withdrawal from the single market and customs union. Most experts had agreed that this was short sighted and self-damaging anyway, so the business and investment world may well breathe a sigh of relief at this prospect.
Can we even be sure that Brexit will go ahead at all? No. The federation of small businesses, as well as the influential Confederation of British Industry are now calling for negotiations to be halted or delayed whilst Theresa May remains adamant that talks will still begin in the next couple of weeks as initially planned.
May now has very little to protect her hand in negotiations with a European Union who will be looking to play hardball. Attempts to project a Thatcher-like steeliness and stability now lie in tatters. Our verdict, which is more of an instinct, is that Brexit will either now be extremely soft, or will simply collapse.
What about currency markets and manifesto pledges?
At the time of writing, Sterling is currently steady against the US Dollar following a fall after the first exit poll was released late on Thursday night.
Investors will know quite well just how the markets treat uncertainty at times of political turbulence, and this is unlikely to play well in the long term. Should the government, as seems likely, stumble through Brexit negotiations with the threat of another election hanging over their heads then currency is not likely to respond well.
This can be seen as good news for property investors though, particularly those living overseas who will obviously see high value in property investment. The market is holding steady and will represent good value when the weakened pound is considered.
Any advice for investors and landlords?
Hold steady. Property has shown time and again that it will hold and increase its value in the face of political and economic turbulence. The truth is that UK property, once again, is more than likely set to be the constant for those looking for safe haven for their money.
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