Duncan Donald

Fri, Dec 13

Conservative party achieve a landslide victory in the UK

Boris Johnson's Conservative (Tory) Party achieved a monumental victory in yesterday's UK election. Whilst the polls were indicating a Tory victory from the outset, a vast majority victory of 78 seats claiming 365 seats across the UK was beyond all expectations. As doubt over Johnsons ability to secure a majority surfaced mid-afternoon, we saw the Pound fall from 1.3217 to 1.3060 but the dip was short lived and as the 10pm polls hit showing a wave of positivity for Johnsons party the market gapped to 1.3400 peaking at 1.3514.

So why did the Pound buy so heavily into a Boris Johnson led Conservative party? The markets and indeed the public seem to believe that the Tory party unconstrained by a coalition will be able to progress the Brexit without the shackles of reliance of a third party for support. Whilst the Brexit deal and its structure still remains unconfirmed and the timeline for not just the Brexit divorce, but the negotiation of subsequent trade deals could be conservatively estimated to take 2-4 years for delivery. The fact the parliamentary process is effectively unclogged seems to give the market a glimmer of hope.

Despite the scepticism of Johnson’s integrity and the Tory campaigning processes, Jeremy Corbyn’s Labour party had a very poor evening, losing some key Labour strongholds as they took just 203 seats. As has Leadership trail crumbled, Corbyn has been forced to state that he will not lead the party into another election, not resigning but paving the way for a switch of leadership. In the immediate aftermath of the election there were no shortage of Labour candidates prepared to admit that the prime issue faced, was the fact that the public could not vote for a party with Corbyn at the helm.

It wasn’t just Labour that suffered as the Liberal Democrats leader Jo Swinson lost her seat in Scotland losing her leadership of the party, and whilst the votes received for the party were not a historic disappointment, they would have seen this as a real chance to gain traction. It seems both Labour and the Lib Dems suffered from the strength of stance their leaders took, in particular Labour. Jeremy Corbyn’s reluctance to commit to a side on Brexit unquestionably contributed to their downfall.

One detracting factor for Johnson was the success of the SNP in Scotland, not only did they unseat Lib Dem Leader Jo Swinson but they won an incredible 48 seats turning the map of Scotland SNP yellow. SNP leader Nicola Sturgeon stated that this gives the country justification for the progression towards a second referendum as the country showed its directional split to the desires of Westminster towards Brexit. There was also a shift in power in Northern Ireland again underlining the potential for referendum.

So, what now? Naturally, the first meaningful comments from Johnson will be key, will he press ahead with the Brexit deal and Domestically what will he be capable of doing to get Scotland back onside in the face of a potential domestic divorce. As the PM reveres in his victory, he still has a great deal of work to do and the hard work starts now. For now, the markets are buying into the win but notably, after the immediate surge there has been no fresh highs. There will also be great importance in comments from EU negotiator Barnier and French PM Macron who have remains strong opposers of Brexit and Johnson’s deal.