With 14 days left for the crucial general election, the political uncertainties in the UK are escalating again post-political parties came up with their respective election manifestos with several radical pledges.
As Conservatives pledged to "get Brexit done and dusted" by January end for better future, Labours promised to "Hold Brexit and go for another round of referendum and trade relationship", while Scotland based SNP vowed to "Cancel Brexit and remain part of EU's single market and custom union- world's biggest trading bloc".
General election theme for most of the political party is quite radical and has been confusing voters as to whom they should vote for. It's also confounding investors and traders over the potential outcome of the UK's general election, due next month (December 12).
However, a gap between PM Johnson and Jeremy Corbyn is reportedly narrowing, as per several opinion polls recent survey. According to them, it looks that public desire to see Mr Boris Johnson as the British Prime Minister once again has tumbled from around 39% to 35%.
If Conservative party fell to garner majority in the December 12 snap election, it is highly predicted that it would lead to hung Parliament, and that will again impact the Brexit and UK's economy will have to pay the price for it, in terms of contraction in economic growth, jobs cut, muted investment over future uncertainties and Sterling devaluation. As it would certainly be difficult for a hung house to bring consensus on one thing and get Brexit deadlock fixed in a shortest possible span of time.
The latest opinion polls survey reported that Johnson-lead Tories fell two percentage points to 43%, on the other side Corbyn-led Labour improved 5 percentage points to 32%, while the Liberal Democrats also weakened by 2 percentage points to 14%. However, still the Conservatives’ are leading the league, but chances of getting a thumping majority at the House of Commons is fading slowly.
Is PM Johnson "Get Done Brexit" by January end again risking the British Economy and UK Stocks?
Many experts criticised PM Johnson's denial approach to extend Brexit transition period, not beyond December 2020, this gives many a sense that this could help British economy to move smoothly out of the EU bloc, as there are a number to thing which should be critically evaluated and its after-effects should be well analysed to avoid any further turbulence in future.
However, PM Johnson's pledge to "get Brexit done" and "forge a new Britain" is gaining traction from many potential voters, but is this enough for him to get a majority at the House?
Northern Ireland's DUP has already shown their disagreement with PM Johnson's Brexit deal and said that we "don't like PM's Withdrawal deal, and will vote against it", but their stand is also not very clear as till date they have not said, that they are going in favour of Labours or part of any alliance post results as they are in favour of Brexit but want a better deal over Irish backstop.
One former Ambassador to the European Union commented that PM Johnson's pledge to get Brexit done by the end of December 2020 is creating risk for the biggest crisis of Brexit to date.
He also added that his refusal to extend transition talks after December 2020, left a very brief period for both the blocs to negotiate a brand-new free trade deal. And, if they fail to negotiate a deal, it would put UK onto costly WTO rules at the end of the transition period, which as per government's own assessment would cause massive damage for the British economy and businesses.
Now, Brexit is scheduled to take place on January 31, next year, this means that PM Johnson will have less than 12 months to finalise a trade deal with the erstwhile bloc. If things do not work out in the way they are being planned, then it will be a catastrophe for the UK.
Financial markets response over the potential outcome of General election
The broader benchmark of the UK had registered big swings in the past one months. In the passing month, the FTSE 100 index registered a high of 7,426.70 and a low of 7,206.36 and was trading at 7,427.76 in the November 27 (Wednesday) trading session. It reflects that investors and traders are still not confident and betting on the general election outcome, and that's why the market has recorded large volatility in the past one month.
Post PM Johnson’s announcement of snap election, market rallied initially as opinion polls were giving higher poll points for Conservative-led government post-December 12, election. Which would ease out economic and political uncertainties in the UK, however, post radical manifestos presented by other political parties, the chances of PM Jonson returning again as the British Prime Minister is fading slowly as per the latest survey revelation.
PM Johnson’s “get Brexit done” by the end of 2020, is witnessing criticism from potential voters, as many believe that this will not help to get a better trade deal for the UK.
However, on the other side, only Conservative party has promised to get Brexit done and dusted to forge a new Britain, rest all parties manifestos looks they will prolong it further, which would leave Brexit to hover over Britain for an extended period, consequently costing money, people and economy as on whole.
However, domestic stocks gauges have rallied decently post December 12, general election announcement, as mid-cap FTSE 250 index has surged more than 750 points or around 4% in the past one month. Rally in mid-cap stocks was more steady than large-cap in the same period, as mid-caps were benefited by Sterling appreciation and over expectations that Tories will return to the parliament with absolute majority, and it will allow them to fix the ongoing Brexit saga, which has jolted businesses, consumers, sentiments, and sterling as well.
At the time of writing (as on November 27, 2019, before the market close at 09:16 AM GMT), the mid-cap index FTSE 250 traded 62 points or 0.30% higher at 20, 927.33.
Also, FTSE AIM 100 recorded a steady-going in the past one month, it added 154 points or 3.3% in the past one month and the surge was quite steady against the broader indices FTSE 100 and FTSE 250, which reflects, investors may be betting on PM Johnson’s victory.
After General election was announced by PM Johnson, Sterling initially reacted positively, but pared gains post opinion polls reported that chances of Mr Johnson to be back in power with the majority is deteriorating, and Labour’s leader Jeremy Corbyn was gaining traction.
In the past one-month currency pair GBP/USD has registered a high of GBX $1.2986 and a low of $1.2769, and at the time of writing at 09:29 AM GMT), GBP/USD traded marginally lower at $1.2856, respectively.
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