In the lead up to the UK general election, the majority of opinion polls suggested that the Conservatives held a significant lead over the Labour Party, of around 10 points on average. Sterling steadily strengthened from the time that the election was called through to polling day, indicating that investors believed that a Conservative majority would be the best near-term outcome for the economy.
Prime Minister Boris Johnson’s slogan “get Brexit done” certainly appears to have resonated with voters in Leavevoting constituencies. Given that the Conservatives now hold of a working majority of 78+ seats, we expect the government to honour its manifesto commitment to bring the EU Withdrawal Agreement back to Parliament before Christmas, and that the UK will leave the EU in January 2020.
Brexit uncertainty has been a central investor concern for a long time, dampening business investment and overall growth. The latest data from the Office for National Statistics showed that economic growth was flat in October. With this election result at last providing political clarity, the process of leaving the EU can now accelerate.