Officially the UK General Election campaign is about halfway done, unofficially of course it is in the final stages of a marathon that kicked off with the 2014 March budget and its new pension freedoms. There are some signs that the electorate have hit the wall with regard to tolerance for political points-scoring.
A large number of investors have not yet definitively decided how to vote
For the last twelve months the poll ratings for both Conservatives and Labour have remained roughly equal at 30-35% apiece. UKIP consistently poll in third place but their support appears to have peaked at the European elections last May and since then have drifted back from the high teens to the low teens, the Lib Dems and the Greens split a further 15%. The most important change barely registers in the national opinion polls but the SNP has seen a strong surge in support throughout Scotland following the defeat of the referendum vote on independence.
In terms of parliamentary seats, the peculiarities of the constituency-based, first-past-the-post system are making their mark. According to electionforecast.co.uk the SNP with about 4% of the overall UK vote will win 47 seats whilst the Lib Dems with about 7% of the vote look set for 24 seats, while UKIP with about 14% will win only one seat, and the Greens who generally poll above the Lib Dems will hold onto their one seat. The Conservatives look set to win more seats than Labour – 283 to their 271 – with a similar share of the votes, due to Labour’s losses to the SNP.
This looks likely to leave the country in a position where not only will no single party win enough seats for a majority, but quite conceivably the only coalition outcomes that would secure a majority will be Conservative / Labour or Conservative / SNP. Neither of these seem remotely likely to occur. The most likely outcome now is in fact not a coalition, but a minority government supported by other parties on an issue-by-issue basis.
The parliamentary arithmetic will be keenly balanced between those smaller parties willing to support a Conservative minority government in a vote of confidence, and those willing to support a Labour minority government. Miliband may well be likely to win fewer seats than the Conservatives but be more able to win a vote of confidence within parliament.
For some time now the Conservatives have been expecting to pull ahead of Labour in the polls as the economic recovery has taken hold, but this has failed to occur. There is a belief in Conservative circles that the last few days of the campaign will see a surge in support for them, when voters finally decide who to vote for. Indeed polls show that a large number of investors have not yet definitively decided how to vote. It seems though that the image of the Conservatives as the “nasty party” as Theresa May famously remarked, has not disappeared from many voters’ minds, despite good economic news.
As in the 2010 campaign, no party is prepared to give details of precisely where the future austerity which their economic policies require will actually hit – it seems they fear the truth on this is too painful for the electorate to bear.
More remarkable is the recent narrowing of policy differences between the two major parties. Having trumpeted the positive effects of sticking to their “long term economic plan” for so long, in the campaign Cameron has been very quick to make new campaign pledges for more money for the NHS, subsidies for commuter rail fares and reductions in Inheritance Tax. None of these previously appeared in the long term plan or appear to have been funded by savings elsewhere.
Similarly Labour, having criticised the policies of austerity over the last five years, has placed bearing down on the deficit at the heart of its manifesto, and has resolutely refused to embrace any unfunded campaign pledges in order to demonstrate its fiscal responsibility. Both parties are seeking to win over the centre ground of voters – the Conservatives by spending more and Labour by spending less.
Perhaps the most important statistic in this campaign is that more than 60% of the electorate, and an even higher proportion of those who will actually vote, are over 55 years old. For most of these voters it is pensions, be they provided by the state or by private provision, which are their critical focus. This is now probably a more important issue than jobs for this age group and is perhaps a factor in why the rising number of jobs is not feeding through into Conservative voters.
With two weeks to go, this election remains too close to call.
The UK financial markets have been happy to ignore the political uncertainty to date – a minority government of any sort may be seen as a negative development by the currency and gilt markets on the basis that it will be difficult for the government to implement its policies. On the other hand a weaker sterling is usually good news for UK stocks and politicians who are unable to do anything could be seen as good news in that they are unable to mess anything up.
