United Kingdom: UK general elections: polls point to a hung parliament
April 29, 2015
While the UK prepare to hold general elections on 7 May, uncertainties loom over who will govern the country in the next five years. The latest polls show that the result will be too close to call. United Kingdom’s two biggest parties, the right-wing Conservative party and the left-wing Labour party, continue to be the frontrunners. However, as likely none of the parties will be able to secure an absolute majority, the chance that a hung parliament will be formed is high.
The latest polls show the Conservatives slightly ahead of the Labour party, thus reversing the results that have prevailed since the beginning of the year. In addition, polls indicate an increase in the popularity of the Scottish National Party (SNP), which will likely become the third largest party in the next parliament. According to recent surveys, the party is expected to take 55 seats in the next parliament, notably above the 6 seats it gathered in the 2010 elections. As a result, the SNP together with the Liberal Democrats (LibDems) will most probably hold the balance in these general elections. The boost of the Scottish representation in Westminster increases the chances of another referendum for independence in Scotland sooner rather than later. On the other hand, smaller parties, such as the Greens and the UK Independence Party (UKIP), will most certainly win very few seats as Britain’s first-past-the-post system does not favor minority parties.
In the event that the Conservative party wins the most seats but fails to secure the 326-seat-majority, they will have to find coalition partners to make up the difference. The latest polls show that the Liberal Democrats and the Democratic Unionist Party (DUP) will likely have this tally. However, as things stand, it is far from clear that the LibDems would go for another coalition with the Conservatives. Difficulties to find viable allies with a sufficient number of seats could leave a potential Conservative minority government quite shaky and may lead to a lost confidence vote.
Even though there are more obvious coalition alliances on the left-wing rather than on the right-wing, the Labour party would not be in a more comfortable position than the Tories if it gets most of the seats but falls short of the outright majority. In terms of political ideology, the Labour party might form a coalition with the LibDems and/or the SNP. However, the difficulty that arises in this context is more in the nature of political maneuvering. The SNP and the Labour party are in a tight race in Scotland, where the popularity of the latter surged after the referendum for independence last year.
A Conservative government would broadly imply a continuation of the status quo, albeit with high risk of a weaker coalition than in the current Parliament. Uncertainties remain in the medium to long term as the party has promised a referendum on EU membership in case it wins another mandate. Regarding economic policies, Philip Rush, Economist at Nomura comments:
“The Conservative party is continuing with the same strategy as before. It talks tougher on the deficit than its actions to reduce it support, and the details of its future plans are hidden. Saying that it will save £1 in every £100 of government expenditure is naturally going to raise less ire than statements saying which departmental expenditures and what benefits fall beneath where the axe is set to swing.”
To the extent that a Labor government is formed, the party has promised to cut the budget deficit every year and get national debt falling as soon as possible. Philip Rush adds:
“Targeting a surplus on the current budget still leaves room to run a deficit of 1.4% of GDP or more, depending on how Labour chooses to define and then spend on investment. […] An added complication comes from things like Labour meaning different things from what is plainly said. So it does not actually intent to get ‘national debt falling’. That would leave little room to be less austere than Conservative plans. It instead refers to debt only growing slower than GDP, which is set to be achieved in 2015-2016 under current uncontested plans for minimal fiscal effort this year.”
As things stand, the most likely outcome is a hung parliament. While the Tories have more chances in gaining more seats, the Labour party could enjoy more support from the smaller parties. However, uncertainty about the post-election landscape remains as small changes in the number of assumed seats could change the form of the next government.
Author: Dirina Mançellari, Senior Economist