After a weekend of debate and discussion, political jostling and nationwide uncertainty, the picture of what the next Government will look like has become somewhat clearer. Here’s our breakdown of where we are at, and what it currently means.
Conservatives lose their majority
On Friday morning, the country woke up to a hung parliament. It’s second in seven years. The Conservative Party, losing 13 seats and therefore its majority, needs all of its MPs plus an additional eight to support its blueprint for the next Parliament in a Queen’s Speech which was set to take place next Monday.
The Labour Party, despite an excellent night by their standards, seem unable to challenge this as the numbers see them short by at least four seats to build a ‘progressive alliance’, at least to get a Queen’s Speech passed and form a minority government.
Conservative/DUP deal widely expected
Later on Friday, Theresa May addressed the nation, saying that the Queen has asked her to form a Government, which she would look to do by striking a ‘confidence and supply’ deal with the Democratic Unionist Party of Northern Ireland (DUP).
A ‘confidence and supply’ deal would see the DUP vote in line with the Conservatives on votes of no confidence and on major policy votes.
Unknown to many in Great Britain, the DUP are a ultra-conservative party that takes its roots in Ulster. It is known to be the most socially-conservative party in the Isles, however is likely to ask for policies which would be seen to soften the Conservatives approach to pensions and to Brexit. With a soft border with Ireland and Single Market access priorities in Northern Ireland, as well as maintaining the triple-lock on pensions.
As of this morning, no deal has yet been finalised between the two parties, with the DUP standing firm on there to be no changes to the pensions triple-lock, and the Queen’s Speech has been delayed by ‘a few days’ so a deal can be finalised.
May tries to keep it ‘business as usual’
During the weekend, Theresa May announced her new cabinet. Despite a minor reshuffle, the main positions have remained the same in a bid to show stability. The most controversial change was to put former leadership rival Michael Gove back on the front-bench as environment secretary.
She faces the 1922 Committee (made up of Conservative backbench MPs) today and have a discussion about what elements of the Conservative manifesto need to change to provide the party with a strong enough position to secure a deal with the DUP, and stave off waning popularity figures with the public.
No new election (or leader) in sight
Polls after the election have shown that Labour are now the most popular party in the country, showing signs that the public have lost faith in the Conservatives after their election risk backfired on them, particularly from such a lofty starting position.
This coupled with Brexit negotiations starting a week on Monday, and subsequent polling which shows that no other Conservative MP would cause a spike in the polls, show that there would be no appetite to call an immediate election, or to dethrone May; as to do so would further destabilise the situation. Although minority governments have been known to be very fragile and usually do not last more than a year.
Instability in the market
What this means for business more than anything is that the country will be in a period of instability. In the first instance, which we are currently in, there is a lack of stability in knowing the Government’s final main policy objectives, and who will be Prime Minister.
After that, a clear direction on Brexit will be important; particularly as negotiations start next Monday. However, in the weeks and months ahead, every law that goes through the House of Commons will be greeted with uncertainty and hesitation, as the Conservatives rule in minority, needing support from across the aisle, as well as full support of their own party.
What this means is a devalued pound, which we have already seen from Friday, and hesitation from UK business and households to invest or move house. International transactions may increase during this time as a gap in the market emerges.