Next UK general election: all you need to know
The UK will hold a general election before Christmas and the public will be voting with one thing in mind: Brexit. We explain everything you need to know about the election.
Election and Brexit timetable: key dates
The starting gun has been fired. Below are the key upcoming dates in the UK’s political calendar:
- Parliament will be dissolved on Wednesday 6 November
- The UK will hold a general election on Thursday 12 December
- The result of the election will be revealed early on Friday 13 December
Brexit extension runs until 31 January 2020, but is 'flexible', meaning a decision can be made on whether the UK Leaves or Remains before this date
Will the election be a proxy vote on Brexit?
Most of the public are likely to vote with one thing in mind. Although political parties are trying to return conversation to domestic policies, such as policing and the National Health Service (NHS), all of this will be overshadowed by Brexit.
The division in parliament over how to handle Brexit has proven the biggest barrier to progress over the last three or so years, but it does mean voters are not short on choice when they head to the ballot boxes:
- Conservatives: To leave the EU with a deal, probably the one UK Prime Minister Boris Johnson has already agreed to, but with a view of leaving no deal on the table.
- Labour: To hold a second referendum on Brexit. The party has said it will remain neutral until one is called before deciding whether to back Leave or Remain. It has said the vote should be between a 'credible Leave option' and Remain but doesn’t want to offer a no-deal option to the public.
- Liberal Democrats: To revoke Article 50 and cancel Brexit unilaterally if it wins an outright majority. However, it is willing to back a second referendum if not. Leader Jo Swinson has said the party’s single mission is 'about stopping Brexit'.
- SNP: To hold a second referendum, during which it would campaign to Remain. The party has said it would also be happy to 'revoke or halt' Article 50. In an ideal world, it wants to push for an independent Scotland that is outside the UK but inside the EU.
- Brexit Party: Advocating for a no-deal Brexit and for the UK to leave under what is known as a ‘hard Brexit’.
- Plaid Cymru: Has previously said it would back a second referendum and campaigning to Remain but could follow the Liberal Democrats and say it wants to cancel Brexit altogether. Rumbles of a Welsh independence vote are also starting to be heard.
Who will win the election?
Brexit has broken the two-party political system that has dominated British politics for decades. The divisiveness of the issue has seen both the Conservatives and Labour lose voters to other parties. The Liberal Democrats, spearheading the anti-Brexit campaign, has poached Remainer voters from across the political spectrum while the Brexit Party has stolen hard-line Brexiteers. The rise of these two parties, following the SNP winning Scotland from Labour, means the British public are breaking free from the two-party political system.
However, the latest polls look much rosier for the Conservatives than any other party. Under the leadership of Theresa May, the Conservatives popularity plunged – so much so that it was nearly running level with Nigel Farage’s Brexit Party in June. However, since installing Johnson as leader, the Conservatives have won back most of the support that had leaked to the Brexit Party. Farage’s party has shown how easily it can poach votes from the Conservatives if it fails to deliver an acceptable form of Brexit.
On the left, the situation is far more precarious. Labour’s decision to sit on the fence for much of the Brexit debate has meant it has lost support, with most voters fleeing to the controversial yet clear promise made by the Liberal Democrats to cancel Brexit altogether. The party has gone from holding less than 10% of the vote at the start of the year to over 18% at the end of October, not far behind Labour on 25.4%. They share the same problem: the vote is split.
For the Conservatives, they believe they can capitalise on that. The thinking is that Labour and the Liberal Democrats will both earn a large chunk of the votes on the left, but the Conservatives will comfortably remain the largest individual party because it has put the Brexit Party back in its box and commands votes on the right. However, the support the Conservatives have reclaimed from Farage’s party is predicated on getting Brexit done. It is unclear whether they will be able to stop support leaking back to the Brexit Party considering Johnson has failed to deliver his promise to take the UK out of the EU by the end of October – 'do or die'.
Hung parliament could be more likely than ever
Hung parliaments – whereby no single party can gain a majority, paving the way for some form of coalition government – are rare, but are the result of divisiveness. The current state of play suggests the Conservatives will comfortably be the largest party, but whether it can secure an outright majority is still questionable. Although nearly every political party has ruled out working with one another, all of them should be seriously contemplating teaming up if they want to deliver their desired outcome.
The Conservatives have no allies now. Its slim majority has been eroded and the confidence and supply deal it has with the Democratic Unionist Party (DUP), which was propping up the government, is dead after Johnson’s deal with the EU crossed practically all of the DUP’s red lines. If the Conservatives did have to look for a partner to form a government then the likely candidate would be the Brexit Party – but both sides are reluctant to talk about a potential partnership in public. The Conservatives say they don’t need Farage’s support, while the Brexit Party is threatening to dismantle the Conservative vote if it tries to stifle a no-deal Brexit. If Johnson does have to ask Farage for support, then the question is – at what price? The Brexit Party will want something in return and, considering its sole mission is to deliver a hard Brexit, it is safe to assume that the demands will be high.
On the other side, the only thing they can agree on is that they disagree. The surge in the Liberal Democrat vote has given it a louder voice, and one it is using to try to become the official opposition. Although the revival is impressive, the Liberal Democrats look nowhere near securing a majority – and the party, plus its leader Jo Swinson, know that. This is why it has said it is willing to work with other parties to push for a second referendum if it can’t govern on its own. However, the problem is that the only realistic coalition on the left would be between Labour and either (or both) the Liberal Democrats or possibly the SNP, and this looks unlikely. The Liberal Democrats have said they will not work with Labour so long as Jeremy Corbyn is at the helm, and Labour has said it refuses to entertain any partnership where it isn’t leading the charge. As for the SNP, the party is much more open to working with other parties, but it has a huge demand that will be hard for Corbyn or anyone else to accept: a second referendum on Scottish independence.
This election has a much higher chance of delivering a hung parliament than in previous ones, but it is the worst time possible for the UK to be governed by opposing sides and to install a coalition of parties that hold very different views on how to take the country forward. The parliamentary arithmetic may be stifling now, but there is every chance it could be just as split after the election.
Bookmakers say 50:50 chance between Conservative majority and a hung parliament
The latest odds from the bookmakers are interesting. They all agree that the Conservatives are highly likely to remain the largest single party, but they also suggest that it is just as likely as a hung parliament.
|Most Seats||Conservatives||Labour||Liberal Democrats||Brexit|
|Chance of Majority||Conservatives||Labour||Liberal Democrats||Brexit||No Majority|
Expect a radical sweep of the House of Commons
A high number of MPs have defected over the last couple of years. Some have left becuase they disagree with their party's views on Brexit, others have jumped ship because they are unhappy with how their party has handled other matters, like the anti-semitism row in Labour. 21 Conservative MPs have been effectively booted out of their party after the whip was removed in early September when they refused to back the government's Brexit deal. For now, only 10 of them have had the whip reinstalled, which means many of this group of high calibre MPs - including 'Father of the House' Ken Clarke and former chancellor Philip Hammond - will not be able to stand for the Conservatives at this election.
Most of the defections have come from Labour, with a handful from other parties. The Liberal Democrats have reaped the benefits and happily accepted MPs from both Labour and the Conservatives. Some joined the newly-formed Change UK, now called the Independent Group for Change. The most staggering change has been the number of people abandoning their party to become independents. There was just four independent MPs when former UK Prime Minister Theresa May miscalled the last election in 2017. Today, there are now 35.
The swapping and changing of MPs has been highly controversial. MPs have been elected based on what party they stand for and their manifesto. So, if an MP decides they no longer stand for either of those things then this usually leads to a by-election so the constituency can decide who to represent them. However, the majority of those that have either jumped or been pushed out of their party have refused to call a by-election. All in all, there are now many constituencies that have an MP standing for something they didn’t vote for. Some MPs that have had a change of heart may be able to retain their seats in this election, but many will be punished by the electorate.
What happens after the election?
This is the question on everybody’s lips, but nobody has an answer. Whichever party is victorious will claim to have been given a mandate for their approach to Brexit. If the Conservatives win a majority then the UK is almost guaranteed to leave the EU before the end of January 2020 at the latest – but whether that is with Johnson’s deal or under a hard Brexit is still unknown. A Labour majority would pave the way for a second referendum and take no deal off the table. But, because there is a good chance that a coalition government may be needed, it may not be as clear-cut as one political party getting its way. Any party that props up a government will have big demands: everything from giving 16 and 17 year olds the vote to giving the Scots a vote on independence.
There has been a strong argument in favour of installing some form of cross-party government to get the UK through Brexit, and a coalition may be one way to bring that about. But in truth, a coalition is the last thing the UK needs right now as it could paralyse the House all over again.
If the election can present a path to finally resolving Brexit within months of the vote, then attention can start to turn to domestic policies once again. However, if the UK does leave the EU after this election then it only closes the chapter on divorce proceedings and opens talks about the future relationship.
How to trade the 2019 general election
General elections often inject volatility into financial markets, and this one could be one of the most volatile yet. This means there are opportunities during the election campaign, once the result of the election is revealed, and in the immediate aftermath. Below are some tips on trading this event:
- Watch the polls: The polls do not always get it right, but they are the best barometer to measure the public’s voting intentions. It is best to track as many polls as possible as the findings of one can be very different to another. There are numerous sites that compile ‘polls of polls’, which collate the results of numerous surveys to give a better overview of the country’s mood. One of the best ones to track is Britain Elects. It aggregates several of the biggest polls conducted in the country but also outlines the results of each individual one to give you the full picture.
- Keep track of sterling: Polls can help inform you how the public intend to vote, but sterling is an even better way of understanding how the markets feel about the election. So far, the pound has generally taken a knock when the probability of a hard Brexit or a no deal have increased, and found support when a softer Brexit has looked more likely. While sterling will continue to be influenced by Brexit during this election, traders will also be reacting to other matters, such as the likelihood of a Corbyn-led government, which is regarded by most as bad for business compared to a Conservative government.
- Read beyond Brexit: If anything, this election should provide an answer to Brexit and decide whether the UK will Remain or Leave, and under what terms. But it is important to remember that whichever party is elected will have the right to govern the country for five years. Many votes will be made purely on Brexit, but consider what each party will do domestically if it wins by studying manifestos. For example, Labour has said it wants to renationalise several industries and this could have a profound effect on investors in things such as utilities, regardless of what happens with Brexit.
- Consider safe havens: This election should provide certainty, but uncertainty will remain rife in the meantime. If things are proving too volatile and you are not feeling confident about your election forecasts, then it may be wise to consider raising your exposure to safe havens. This could involve placing more money behind safe commodities or currencies, like gold, the Japanese Yen or the Swiss Franc. You could also reduce exposure to UK (and even European) assets and opt for more internationally-diverse businesses that will be able to weather whatever storm the election throws up.
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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