Good news? Bad News? Who knows? Bath Building Society CEO, Dick Jenkins
So the election turned out to be something of a political own goal for the Conservatives, a small consolation prize clutched from the jaws of a major victory. Just at the time we could have done with some sure-footed political nous from the government, we have yet another major miscalculation which puts us in something of a quandary. Instead of a strong and stable majority government (which was, of course the whole point of the election) we now have a sort of coalition that could be walking on eggshells with a newly resurgent Labour party snapping at its heels.
A disaster? Not necessarily….
Despite the election throwing up a result that virtually every party was unhappy about, I am not as pessimistic as many on the consequences of all of this. The election outcome might bring a few changes in direction which may turn out to be helpful.
For starters, it might mean that we have a less strident tone set in the Brexit negotiations and a more workable compromise emerges than the “hard Brexit” we appeared to be prepared or resigned to accept. It was interesting that the FTSE didn’t tank on the morning that the election results landed because the City saw a single-market upside in the result. And the inclusion of the Northern Irish DUP in a political arrangement with the government may just give proper focus to the unique circumstances of the land border between the North and the South in the Brexit talks.
The sheer volume of legislative change required by any kind of Brexit (“hard”, “soft”, “open”, sky-blue-pink or whatever) is such that there will be relatively little room in the parliamentary timetable for much else. I am told that the Great Repeal Bill will be of the magnitude of 15-20 normal bills, so maybe this isn’t a great time for a hyperactive reform programme in other areas of government. Big majorities allow governments to stake out ambitious programmes. We already have plenty on our plate resolving the European question.
And maybe a minority government will have to think a bit more carefully about major policies than it appeared to before casually popping them into its manifesto. Some of the policies the Tories came up with weren’t bad in concept, but without setting a level at which winter fuel allowances would be paid and without setting some kind of cap on social care costs, it’s little surprise that these policies blew up in their faces.
If coalitions of one form or another require politicians of different hues to work together, then this may be no bad thing. Despite the yah-boo tribalism we see on Prime Minister’s Questions and tetchy Newsnight interviews, MP’s of all parties are very capable of working together for the common good. It’s a lot more collaborative than you might think. And the sky didn’t fall in during the Conservative/ LibDem coalition. In fact, I rather think history will judge that partnership to have been a success.
In terms of the markets that matter to a humble local Building Society, the savings and housing markets, it’s a little early to work out the ramifications. I suspect the election result and the economic uncertainty it may trigger will keep the Bank of England wary of pushing up interest rates anytime soon, so little relief for savers on the horizon. House prices have been cooling in recent months as uncertainty has grown in the lead up to these historic Brexit talks. But a government that’s been taken down a peg or two might just listen to those calls to build more houses.