Tired of elections? I’ve got some bad news for you

There’s a lot of talk at the moment about a snap general election before spring is out. John Stepek looks at what that would mean for investors.


Theresa May is not so keen on calling an early election, but we may get one anyway
(Image credit: 2017 Matthew Horwood)

Democracy is a great thing. I'll argue the point with anyone who says it isn't.(My main argument being: what do you replace it with, oh wise one?)

But that said, it's possible to have too much of a good thing. Andif you live in the UK (and plenty of other places for that matter), you might be a bit sick of voting at the moment.

If so, I've got bad news for you it's starting to look like we'll be going to the polls again before too long...

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Having a general election in Britain right now would be pretty selfish

The prime minister would need to put it to the House of Commons, because we now have fixed-term parliaments. There she'd have to win the backing of two-thirds of MPs. But that's probably only a minor hurdle.

Prominent Tories are keen on the move. Earlier this month, William Hague argued that the case for an election in spring is "very strong indeed". His main concern was getting around the Fixed Term Parliaments Act. He suggested repealing it.

But at the weekend, Labour said they would support such a motion. Labour argue that this is because they want a chance of winning power. In reality, it's quite possibly the only way that they believes they might be able to get rid of Jeremy Corbyn by the end of this year. Otherwise, despite the hopes of non-Corbynite Labour members, they could drag on as they are until 2020.

Theresa May is apparently not so keen on calling an early election. She apparently reckons that it would be self-serving and that it would create added uncertainty, according to The Daily Telegraph.

And to be honest, I think that's a remarkably principled stance to take in some ways.I realise that perhaps sounds odd. But think about it.

If May goes to the country now and wins, she gets to claim all kinds of things. She gets to claim that she has a personal mandate (she's no longer an unelected prime minister, la Gordon Brown).She gets to claim that she has a mandate for any kind of Brexit she chooses. She gets a bigger majority in Westminster, which makes her life easier on all sorts of levels.

In reality, it's questionable whether an election victory right now would really represent any of those things.

The main opposition party is in a mess. Regardless of who you would plan to vote for and your own political leanings, you would have to engage in some seriously motivated reasoning to believe that Labour can win a general election this year.

The LibDems can probably make inroads in "remain" areas, but that won't win them an election. Ukip have been damaged by ongoing infighting and the fact that with Brexit actually happening they don't have much left to campaign on.

So it's not much of a contest, frankly. There are a lot of people out there who voted "remain", and who might not even like the Tories that much, who will end up feeling they have little choice if they're asked to vote in a couple of months' time.

So you could argue that it's pretty selfish to call an election now. And I reckon that May has genuinely felt that it's better to keep things as calm as possible while Article 50 and the like is being dealt with.

However, that might now have changed.

Two things that might have changed May's mind

Both of these things make May look as though she's being challenged on all sides. And both of them could be tackled by winning a general election.

The SNP can't really win any more Westminster seats in Scotland. If they lose many (perhaps even any), it would make Scottish first minister Nicola Sturgeon's claims to have a mandate for a second independence referendum a lot more tenuous.

And if May wins a general election handsomely, then she has a personal mandate to tell the snipers in her own backbenches and on the "hard" Brexit side of things to back off and let her get on with the job.

Will these events shift the electoral calculus firmly enough to persuade May to go for it? I'd be very surprised if she's not weighing it up. If it were me, I'd be sorely tempted. But then, maybe I'm less principled

Anyway what would an early general election mean for investors? The pound would probably be up on another rollercoaster. But if you got a Tory landslide, that would point to more certainty, and sterling would probably end the process stronger.

How would it interact with the other elections around Europe? Well, in order to keep Article 50 and the Brexit talks moving along, you'd need to have any UK election done and dusted by the time the German elections came around that's September. But if she's going to go for it, best off doing it as soon as possible.

In fact, if it's going to happen, I'd expect we'll hear about it by this time next week, if not beforehand. So one way or another, we'll soon find out.

John Stepek

John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.