The elections, Brexit and the economy
Being relatively new to Britain, I am learning new things about my newly adopted country on a daily basis and was reminded about this only this morning when I opened my news feed and saw the election results. The British people are not afraid to let their government know what they think of their performance through the ballot box.
On 18 April 2016, Theresa May backtracked on herself by calling for a snap general election. Politically this made sense, there was widespread perception that Labour were in turmoil and all indications were that the Tories would win by a landslide. Fast forward to 8 June 2017 and, oh dear, the people have spoken, no majority for Mrs May. Britain, and the world, are now waiting with baited breath to see whether the Conservatives can form a coalition government or whether we will be going back to the polls. But unfortunately for the Pound, the world does not stop turning and with the continued political uncertainty, those looking to protect their wealth and investments are doing so by relieving themselves of their Pound investments with the Pound trading at its lowest level to the Dollar since the elections were announced.
I am not surprised by this result as the people of Britain had to choose between two leaders which, in my opinion at least, failed to inspire the public. The Tories election approach was to focus on Brexit and the need for strong leadership, but their delivery and their interactions with the EU earlier this year it seemed that they are more interested in strong arm leadership. In contrast, Labour seemed to focus on ending austerity but they were not able to effectively show where they intend to find the money in the budget to do so. We all still remember the gaffe over the increase policing proposal.
Ultimately, Britain is in for a rough ride over the next couple of weeks with Brexit negotiations due to begin in 10 days’ time and no constituted government, this may need to be postponed increasing pressure at the negotiation table. This will result in increased uncertainty thereby negatively impacting the Pound. While this is good news for our exporters, this will mean that everything will cost a little more at home resulting in less money being spent, reducing economic growth. Those people in the luxury market will, if they haven’t yet, start feeling the impact with the middle and upper middle class beginning to reduce their luxury spend. People will be looking to how far their Pound stretches and this could be at the expense of quality. This is going to hit local producers and cheap foreign imports might begin to flood the markets.
Overall, the British people are in for a rough and bumpy ride but, if I have learned one thing about the British, it is that they have an uncanny skill of bouncing back. This election result is just one of the gusts of wind from this Brexit storm that we will need to ride out. As with any big storm, there will be some storm damage but let us remember how beautiful the sun looks when it comes out from behind the clouds at the end of the storm, the British people will endeavour and I expect that as a nation Britain will be stronger and better off once all is said and done.
By Jarrod ChristianTalk to Barnes Roffe today