UK general election update

There are still 99 days until the UK general election, but already the media is full of polls, TV debates and debates about the TV debates.

Ed Miliband
Source: Bloomberg

What is already clear from the polls, however, is that even if one party emerges with a majority, it is likely to be a slim one. A hung Parliament – the second in a row – is the most probable outcome, with the winner needing to put together a coalition to provide a stable platform for government. Unlike in 2010 however, that coalition may not just be à deux, but a cobbling together of a number of different interests.

Recent polls from YouGov, ComRes and Survation have all put the Conservatives ahead, but not by much. The overall picture is unclear, as both Labour and the Conservatives lose votes to fringe parties; in the latter’s case this means Ukip, but for the former it could mean the Greens, the SNP or Plaid Cymru.

The big two parties have been in decline in vote share terms for years. Gone are the days when Labour and the Conservatives were essentially the ‘only game in town’. It is hard to believe that John Major’s share of the vote in 1992 was 42%, while even in 2005 Tony Blair could still rely on the votes of just over 35% of the population. Now both main parties struggle to reach 32% in the polls, with Ed Miliband’s ‘Core Vote’ strategy that aims for a 35% share that could put him into Downing Street looking in serious jeopardy.

For those looking to find a reliable answer on the outcome of any political contest, the lesson from the US presidential election of 2012 and the 2014 Scottish referendum is the same – follow the money. In both of these events, IG’s binary market on the outcome predicted the result without any of the apparent neck-and-neck performance indicated by the polls, with the majority of money placed backing the eventual winners.

As the time to the UK’s election ticks away, the current betting points to a hung Parliament result, with ‘no overall majority’ currently on a 75% chance of being the outcome. The next closest is a Conservative majority, but our binary market currently suggests a 14% chance of this happening, compared to an 11% possibility of a Labour majority.

The current level of campaigning will seem modest compared to the barrage of broadcasts and output from the major parties as the election nears, and of course the TV debates could prompt a shift in opinions similar to the ‘Clegg Bounce’ of 2010, but for now the smart money is putting its weight behind a hung Parliament. 

You can find the markets with which to trade on the UK general election in the folder 'Binary Politics' > 'Next UK General Election' in the Finder, once you have logged in.

Binary market for UK general election

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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