Will the election usher in a new era of instability?

published 7 May 2015

In the final countdown to today's general election, there were no signs that the campaign had changed anything. The two main parties remained deadlocked at around 32% of the vote each; the Tories were exhorting Ukip voters to rejoin the fold; Labour was still insisting there would be no formal deal with the SNP; and both parties were discussing what sort of arrangement would be deemed legitimate in the likely scenario of a hung parliament.

Meanwhile, markets are increasingly jittery. One-week sterling/dollar implied volatility hit a four-year high, suggesting that investors are feeling more concerned about fluctuations in the pound's value than at any time since the aftermath of the last election.

What the commentators said

The deadlock in the polls suggests the voters just don't trust the leaders, and they did little to rectify that, said Hugo Dixon on breakingviews.com. Cameron wouldn't spell out his welfare cuts, which made people think he was stalling in order to avoid losing votes; Miliband refused to admit that Labour had overspent.

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What now? "There could be months of fumbling around," said economist.com's Buttonwood blog. A Labour government imposing higher taxes and more regulation is a major near-term worry, while the SNP's success could lead to the government collapsing.

Longer-term, the question of Scottish independence isn't going to just go away, said Simon Nixon in The Wall Street Journal, while an EU referendum is also a major headache. The upshot is that "one of the most politically stable countries in Europe looks destined to be transformed into one of the least stable".

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.