“FOR THE CITY – A RESULT BEYOND ITS WILDEST DREAMS!”
This has been an extraordinary 24 hours in terms of seismic political upheaval. I remember being shocked at the outcome of the 1992 election which Lord Neil Kinnock clumsily and deservedly lost after a desperate rally. However today’s machinations are quite extraordinary considering the polls are significantly more sophisticated and accurate today than they were 33 years ago! The polls got it hopelessly wrong! The bookies were a little nearer the mark, but it was Professor Curtice, whose exit poll prognosis for the second time in recent months, was spot on the money, drawing ludicrously dismissive statements out of Alastair Campbell and Lord Paddy Ashdown.
For the Conservatives to win an outright majority was a staggering effort and achievement, when many thought the campaign was rather frustrating and ineffective, until the last knockings on Friday morning. How did this political miracle transpire? There were four major reasons. The phenomenal angst and anger vented by the nationalists in Scotland. To virtually wipe out Labour in Scotland, SNP sent a message to Westminster that Scotland demands change. Maybe another referendum is back on the agenda. Secondly the Lib-Dems were all but wiped out. Nick Clegg and his party paid a cruel price for putting country before party. I think the public acknowledges that Mr Clegg was an honourable man, but few in business will be sorry to see the back of Dr Vince Cable. Thirdly the ‘don’t knows’, which probably totalled 10% suddenly though quite quickly – Does Ed Miliband have the chutzpah and charisma to be Prime Minister? The answer is probably no!
Finally, boring though it was the Tories were on message during the campaign, with Labour seemingly without a cogent economic policy. Labour’s left of centre agenda with the SNP frightened our allies, business, industry and commerce and sadly the two ‘Eds’ did not understand the idea that if you incentivise business, companies and employees pay more tax, which allows the country to service the public sector a la NHS – very simple philosophy but it fell on deaf ears!
To me this was a nasty bad-tempered election, which has left the country more socially divided than at any time since Ramsay MacDonald. Some senior advisors like Jonathan Powell erroneously feel that Mr Cameron, despite a small majority, is very vulnerable, providing Labour with a great chance to rise like the phoenix from the ashes. I don’t see that. The more Messrs Salmond and Sturgeon act in such an arrogant manner, the less concessions they will get out of the government. I hope it does not take the SNP long for the penny to drop.’ Unless the SNP are conciliatory that party, as far as the government is concerned, will become a toothless tiger.
EU membership will be an issue, but not an insurmountable one. The PM will attempt to renegotiate terms, but will probably fall short. However, of course we will be frightened in to remaining in the EU. A lack of social mobility and a touch of arrogance by the leadership have bothered me. So has the lack of interpersonal skills during the campaign by all parties been disappointing – nothing like enough pressing the flesh. I am sure he is a very talented man, but Mr Cameron seems very cold to me.
Anyway the City, business, industry and commerce have had a right royal result. Sentiment remains positive. Confidence in the markets has returned in spades. Overnight Sterling rallied by 2%. Pressure on gilts evaporated. Though the FTSE 100 is driven by international issues rather than parochial political problems, today’s initial sharp upward movement was a relief rally and there may be not that much momentum behind it.
Now that the threat of ‘mili-bashing’ has disappeared the following sectors rallied like a grilse – Insurance (Aviva +1.6%), Bookmakers (Ladbrokes +9%), estate agents – Foxtons (+7%), utilities – Centrica +7% and SSE +5%. At 2.30pm the FTSE 100 had added 125 points to 7012. The FTSE 250 was up 4%, but has settled up 2.5%.