As we go to press, the General Election has been called for 8 June. The implications of the snap general election are at the same time both momentous and modest. The Prime Minister will be hoping, and expecting, to increase her majority substantially.
The pound soared as the election was announced, which is not a surprise given it was looking undervalued. An increased majority for Theresa May’s government would be assumed to be a market-friendly outcome, though recent events suggest nothing can be taken for granted.
They are momentous because the Conservative Party is likely to win a substantial majority, replacing its slim majority in parliament. They are modest because, although her majority was marginal (only 17 seats) May has still been able to govern with reasonable impunity. There can be little doubt of the most likely outcome. The Conservatives lead Labour by 18 points in the opinion polls. The bookmakers place the chance of a Conservative majority at 80%. Simulations, based upon a uniform swing, suggest a majority of over 100 seats, almost exclusively at the cost of Labour.
The key part of the Conservative manifesto will be the promise to deliver what has been termed a ‘hard Brexit’ through robust negotiation with the European Union. It remains to be seen whether the more populist government rhetoric that accompanied the Prime Minister’s speech at last year’s party conference returns when the manifesto is published in the coming weeks.
The pound soared as the election was announced. That may seem counterintuitive as traders have been betting on sterling falling ever since last June’s Brexit vote. The election is likely to shore up the government’s hard Brexit line making it even more likely to happen.
SPECIFIC CHARITY ISSUES
A number of sector bodies and charity lawyers have been issuing reminders about the need for charities intending to take up some lobbying before the election that the Charity Commission has specific rules and guidance on the subject, guidance CC9 ‘Speaking Out: Guidance on campaigning and political activities by charities’. This is more of an issue for a small part of the charity sector, as the majority do not undertake campaigning in the broad sense. Those who do need to observe the guidance on matters of independence and appropriateness.
Within that context, as parties form manifestos and make pledges, some charities will be making their causes and the needs of their beneficiary group known. They have a strong insight into societal needs, so their contribution can help to shape the agenda of politicians.
Some of the sectors’ membership and umbrella bodies are highlighting the fact that Brexit will be a major part of the pre-Election debate and that one of the key issues for charities is that of staffing and free movement of labour, be it for employment purposes or the significant contribution made by volunteering.
On a general note, with little notice of the election, those working with various state departments may find timetabling of their issues affected as attention turns to election matters.
By Guy Foster, Head of Research Guy leads Brewin Dolphin’s Research team ensuring that a rigorous and exhaustive investment process is employed. He also provides recommendations on tactical investment strategy to Brewin Dolphin’s investment managers and strategic recommendations to the group’s Asset Allocation Committee. Before joining Brewin Dolphin in 2006, Guy was an Investment Director at Hill Martin (Asset Management). Guy has a Masters in Finance from London Business School. He is also a CFA charterholder, holds the CISI Diploma, and is a member of the Society of Business Economists. Guy frequently discusses financial issues with the written and televised media as well as presenting to the staff and clients of Brewin Dolphin.
The opinions expressed in this document are not necessarily the views held throughout Brewin Dolphin Ltd.
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