The Scottish Bogeyman
Well, I suppose it would be somewhat remiss not to mention the UK election, which was keenly watched by investors around the world. But really, what was all the fuss about? After all, the result was never in doubt! That is, if you ignored every single opinion poll produced during the election campaign (I wonder if any pollsters will be joining Miliband, Clegg, and Farage in the queue for a new job). Move along, nothing to see here. By the time this blog is published, David Cameron will be a few days into his second term as Prime Minster with a small but eminently workable majority, making all those predictions about unholy alliances and Faustian pacts between parties look like mere scaremongering. In the end though, the Conservatives used scaremongering very much to their advantage in something of a masterclass in negative campaigning. The Scottish bogeyman, in the form of the SNP, hasn’t completely gone away, having almost completely swept the board north of the border, but it won’t now have the ability to tear up the former coalition’s economic plan in cahoots with Labour. So business as usual then? Well, not quite. Businesses were heard calling for more tax cuts just ahead of the election. But the Government is going to have bigger fish to fry. The fallout from the SNP’s annihilation of the Labour vote in Scotland (one result the pollsters did get right) will probably mean more fragmentation of the United Kingdom. (Is there be a more inappropriately named nation in the world?) It could mean maximum devolution for Scotland, if not complete independence. But then things will start to get messy, with talk of English votes for English laws, an English Parliament, and more regional assemblies. And we haven’t even mentioned Wales and Northern Ireland. What investors are really worried about though is the UK’s position vis-à-vis the EU. The Tories have promised to hold an “in/out” referendum by 2017, and unless Cameron achieves the seemingly impossible and negotiates a transfer of powers back from Brussels to London, there’s a very real chance that the UK’s membership of the European club might be cancelled. Irrespective of whether this will be a good decision for Britain or not, it’s going to mean two more years of uncertainty and sweating over opinion polls. A familiar refrain from Cameron throughout the election campaign was “vote Miliband, get (SNP leader Nicola) Sturgeon.” What the British appear to have done is vote for stability, but got chaos!