the snap general election thread

setmefree2

What will happen if Jeremy Corbyn's Labour wins the General Election? We asked the experts

Labour has surged in the polls in the last fortnight, closing the Conservative party lead to as little as five points. The pound moved in the opposite direction against the dollar as traders started to consider the previously unthinkable: a Labour General Election victory.
Before everyone gets too excited, it should be remembered that Labour polling surged before the last General Election in 2015.

Yet stranger electoral things have happened in the last year than a Labour General Election victory.
What would actually happen to sterling if Corbyn emerges as the next leader of our country? And could it even lead to a stronger currency?
The Corbyn knee-jerk

Analysts are not exactly falling over themselves to talk about a Labour win; to say a Labour majority is not a base case for most is something of an understatement.

Nevertheless, when pushed there is little doubt about the immediate effect of a Labour victory on currency markets: a knee-jerk movement downwards.
Alexandra Russell-Oliver, an analyst at Caxton FX, says:

A Labour victory would be quite a shock. Regardless of whether polls narrow between now and the election we would see further weakness.

At the last General Election the Tory victory, first revealed in exit polls, saw an immediate upwards move of about one per cent as traders discounted the possibility of another coalition government (more of which later).

The reverse would likely be true of a Corbyn victory, with a hefty uncertainty multiplier as a cabinet largely lacking in governmental experience took shape. Then there’s the approach to one of the key questions of our time.
Brexit (red or blue)

Brexit is the biggest issue facing our nation for decades, but it has not dominated the electoral conversation as might have been expected.
If Labour win, Corbyn’s approach to Brexit will be a key determinant of the pound’s prospects. For now that is a major source of uncertainty, according to Martin Arnold, global forex strategist for ETF Securities.

We don’t really know about the position that Labour are coming from in terms of their relationship with the EU.

“That would be another source of uncertainty and another source of weakness” for sterling, he added.
The Labour parliamentary party is mostly against a “hard Brexit”, but many analysts think Corbyn himself supported the decision to leave the EU – while a fair chunk of Labour voters voted for Brexit.

The Labour manifesto tries to negotiate that tricky situation by saying it will try to leave the EU but “retain the benefits” of the Single Market and Customs Union. But how that is actually worked out in practice would be hugely uncertain.
Jordan Hiscott, chief trader at Ayondo Markets, said: “With a Labour victory, the dual effect of a hugely unexpected result and Labour’s general view on negotiating with the EU over Brexit, which is softer than of the Conservatives, would in my opinion see sterling quickly fall back to $1.2 – and even as far as the October 2016 low of $1.1755.”

http://www.cityam.com/265484/happen-if-jeremy-corbyns-labour-wins-general-election-we

Thrugelmir

wotsthat wrote: »

You ought to read the Labour manifesto. There's a section on immigration. You could quite easily substitute the word 'Labour' for 'Conservative' and you'd be none the wiser.

I'm not interested in reading manifestos as they actually hold little value. I expect the potential leader of the country to express his views when asked questions. He most certainly holds an opinion that we should all be aware of. As that's the ultimate direction of policy. Nor do I think targets are meaningful either.

setmefree2

Same

Could a spending boost push the pound higher?

There is little doubt the election presents voters a genuine choice between two different views of how government should act. Labour’s manifesto offers a big expansion in fiscal spending for investment as well as the prospect of multiple big re-nationalisations.
Edward Hardy, an economist at World First, said: “With foreign investment, access to talent and tax burdens already such an unknown quantity in post-referendum Britain, the last thing UK Plc needs now is concern that a wave of nationalisation could sweep away incentives for private enterprise.”
From a macroeconomic point of view the consequences of Labour’s agenda are controversial. Some analysts even ask if a big boost in government spending could spur sterling higher.
We should not discount that possibility, says Jordan Rochester, forex strategist at Nomura. In a note to clients he says:

If it is a Labour victory it’s perhaps not as bad for the pound as you’d expect given the fiscal spending would likely eventually lead to higher real yields once the initial uncertainty passes.

To fund higher investment the government would have to issue more debt, and offer higher bond yields (which move inversely to prices, which would fall) to tempt in investors.
That could theoretically lead to investors moving money back into sterling assets as they chase the higher returns – boosting the pound. Meanwhile increased government spending would also provide a boost to growth and potentially even productivity, at least in the short term.
Consensus on this point is, shall we say, somewhat lacking.
Higher interest rates on debt are generally correlated to stronger currency in developed markets. However, if investors lose faith in the government’s ability to pay its debts that relationship will break down, says Alvin Tan, forex strategist at Societe Generale.
“When that relationship breaks, it breaks in a very extreme manner,” he says, arguing a widening current account deficit (as the UK asks the rest of the world to fund its spending) would be negative for the pound.
“From a fundamental point of view that will be negative for the UK’s external account,” Tan says, and therefore negative for sterling.

http://www.cityam.com/265484/happen-if-jeremy-corbyns-labour-wins-general-election-we

setmefree2

Same

Hung Parliament

These arguments go to the heart of some of the biggest questions on how we fund our government. They will probably also be moot, as a Labour majority is still seen as a distant prospect.
Of more immediate concern is the possibility that a Labour poll surge brings a hung Parliament – which would be the worst of both worlds for markets as the UK re-enters the murky world of coalitions and deals in smoke-filled rooms.
With the UK now within the final fortnight of the General Election campaign, the universal consensus is that further poll narrowing will lead to a weaker pound. It could be a bumpy ride.

http://www.cityam.com/265484/happen-if-jeremy-corbyns-labour-wins-general-election-we

A_Pict_In_A_Past_Life

Despite recent occurrences political and otherwise, the person most trusted to handle Brexit?

Which of the following do you think would
make the best Prime Minister?
Theresa May 45%
Jeremy Corbyn 28%
Not Sure 27%

https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/dcfgflapq2/TimesResults_170525_VI_Trackers_Terrorism_W.pdf

wotsthat

Thrugelmir wrote: »

I'm not interested in reading manifestos as they actually hold little value. I expect the potential leader of the country to express his views when asked questions. He most certainly holds an opinion that we should all be aware of. As that's the ultimate direction of policy. Nor do I think targets are meaningful either.

What questions do you expect to be answered beyond what's already in the manifesto?

I assume Theresa May has answered them to your satisfaction?

newatc

OMG. The idea of a foreign secretary Jeremy Corbyn in a Tory led Coaltion government.

At least there would be a universal agreement that would be a nightmare scenario:)

setmefree2

Thrugelmir wrote: »

I'm not interested in reading manifestos as they actually hold little value. I expect the potential leader of the country to express his views when asked questions. He most certainly holds an opinion that we should all be aware of. As that's the ultimate direction of policy. Nor do I think targets are meaningful either.

As a matter of fact, and without judgement as to whether or not it is a good or bad thing, I think we can say that a JC government will not reduce immigration they will increase it. They will also bring many refugees to this country.

wotsthat

Westernpromise' idea of Tories voting for Labour in safe Tory seats to keep Corbyn as opposition leader whilst maintaining a massive majority looks an even worse idea than when mooted a couple of weeks ago.

Who'd have thought we'd have posts discussing a hung parliament or a JC PM as though they might be a vaguely realistic prospect just a few days ago.

setmefree2

If this swing were replicated across the country then Theresa May's majority would be slashed to just two. If current trends continue into polling day Jeremy Corbyn will be in office and the UK will be looking at an unprecendented programme of nationalisations and increased public spending.

https://www.poundsterlinglive.com/gbp-live-today/6852-gbp-to-eur-and-usd-general-election-outcome-ing

Because Nationalization is so what we need to be spending money on right now.

What would happen to GBP if Corbyn Wins?
“We think a Lab-Lib-SNP coalition risks having a Marmite effect on markets: either they’ll ‘love it or hate it’. On the one hand, a softer Brexit could be the goal of a Labour-led coalition government; but on the other hand, it raises political uncertainty – which has proven to be GBP’s Kryptonite over the past year,” says Patel.
In the short-term, ING would expect the uncertainty factor to prevail.
“The bottom line is that GBP risks from the General Election look asymmetrically skewed to the downside – there is now more to lose than gain,” says the analyst.
This is clearly a shifting picture and the only real certainty we now have is that uncertainty is set to plague the UK once more.
And the Pound hates uncertainty.
"The worrying thing for Mrs May and all those hoping for a large Conservative majority to help smooth the Brexit process is that the momentum is very much with Labour who are now enjoying their highest level of support since October 2014!" says Jonathon Pryor at Investec in London.

https://www.poundsterlinglive.com/gbp-live-today/6852-gbp-to-eur-and-usd-general-election-outcome-ing