UK markets will be in limbo during the pre-election period as we head towards one of the most uncertain ballots in decades, says Guy Stephens, director and boardmember at Rowan Dartington Signature.
Hold on to your hats for 39 days of campaigning, mud-slinging, manoeuvring and posturing as the UK election kicks off and parliament is dissolved. UK markets will be in limbo during the period, with the most likely outcome currently being a hung parliament with very little to choose between the two main parties. If this comes to fruition, the minority parties will have control over the final outcome and, most importantly for the economy, who resides at 11 Downing St. The seven party televised debate is on Thursday and is likely to underwhelm with a fair degree of message dilution and limited ability for anyone to score any direct hits on anyone else due to the number of participants, much as David Cameron probably wanted.
This is Democracy as we know it but it does somewhat work against market and economic stability and does question the degree of control that parliament has over areas which require more than a five year strategy. Perhaps this is why health, education and major projects in defence and transport always seem to be in a state of crisis and experimental change, as each department head comes and goes depending on how the political wind blows.
This is also probably why the Chinese have been able to achieve so much in such a short space of time as there is no opposition. The death this week of founding Prime Minister, Lee Kuan Yew, of Singapore also reminded us of how much he was able to achieve in his 31 years in charge, with a 15 fold increase in GDP per capita wealth between 1960 and 1980. However, the human rights record and lack of free speech and political opposition are also very similar to those of China, despite it technically being a democracy. Singapore is a country we hear very little about in the UK, but it is the only AAA rated country in Asia out of nine around the globe. It also has the fourth largest financial centre and the fifth busiest port in the world but a population of just 5.5m.
In the UK, it does appear that the process of consultation in the pursuit of increasing democratic participation causes significant delay which restricts our economic progress. China was reportedly building 75 new airports during the ten year period of the noughties – we have been debating where to build a single new runway in London with still no clear decision remotely on the horizon over what seems a similar time period.
Unfortunately, coalition governments create even more endless debate and disagreement. It is quite difficult to identify what historic achievement defines this Government over the last five years. Withdrawing from Afghanistan and getting the economy going would have likely happened whoever was in power. Similarly, outside of further reductions in the deficit, continuing to create jobs and maintaining economic growth, there is nothing particularly wrong with where we are which therefore fails to galvanise a strong desire for electoral change. The changes to pensions are perhaps the Tories major trump card which touches most of the electorate but the polls have not yet reflected this.
It therefore appears that regardless of whoever manages to form a Government, most likely in coalition, we will have another five years of limited progress, fudged proposals and compromise with only policies with the least resistance making it through. Cross-rail will be opened in 2018, but the idea started in 1974 and took 35 years of debate before building started in 2009. Surely we can learn something from the Chinese and Singaporeans about getting things done.