Will the election usher in a new era of instability?

In the final countdown to the general election, there were no signs that the campaign had changed anything.

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.

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".

Recommended

How the government can give our start-up businesses a hand up
UK Economy

How the government can give our start-up businesses a hand up

Government cash might be nice, but there are better things it could do for start-up businesses, says Matthew Lynn
1 Aug 2021
Quantitative easing: too much of a good thing
UK Economy

Quantitative easing: too much of a good thing

The Bank of England is addicted to quantitative easing (QE), the House of Lords has warned. What does that mean for investors?
26 Jul 2021
The myth of hypothecated taxes
Tax

The myth of hypothecated taxes

The government wants to add a penny on our National Insurance contributions to pay for social care. But it won’t, says Merryn Somerset Webb. It will j…
23 Jul 2021
Lockdown Day saw the market hit rock bottom – could Freedom Day mark a top?
UK stockmarkets

Lockdown Day saw the market hit rock bottom – could Freedom Day mark a top?

When the UK locked down against Covid, markets plunged, but recovered quickly. Could England’s removal of restrictions mark the market top, asks John …
19 Jul 2021

Most Popular

Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021