A Tory landslide would boost the economy, predict experts
AN INCREASED Tory majority in the general election would boost the economy by encouraging businesses to invest, says a leading think-tank.
The Centre for Economics and Business Research said a resounding victory for Theresa May would ‘reduce the current sense of business uncertainty’.
A ‘colossal defeat’ for Labour would also raise confidence by allowing a credible opposition to emerge, the report added.
The comments came as currency experts said the pound could rise to as high as $1.40 by the end of the year if the election was a resounding victory for the Tories.
Sterling held steady at just under $1.29 and €1.20 yesterday following a dramatic surge on Tuesday after Mrs May announced her plans for an election in June.
Scott Corfe, director of the CEBR, said the vote should herald ‘greater certainty and a more competitive political system’.
‘An increased Tory majority, which would almost certainly be the result of an election, will increase economic and political stability and reduce the current sense of business uncertainty. Increased certainty should feed through into higher levels of business investment, supporting growth in the short term.
‘A colossal defeat for Labour, with the ousting of Jeremy Corbyn, would also allow a credible opposition party to emerge from the ashes … This can only be good for the economy.
‘Just as competition leads to better out- comes in business, so too does competition in politics, with credible political parties competing to deliver the policies which best guarantee prosperity for the nation.’
The prospect of an increased Tory majority has boosted the pound with analysts suggesting it will put Mrs May in a stronger position to negotiate Brexit with the EU and her backbenchers. Sir Martin Sorrell, chief executive of global advertising agency WPP, said: ‘She’s not susceptible to uprisings or results from the hard Brexiteers.
‘I think the reason why sterling strengthened was that the markets are saying this probably means a softer Brexit or a transition agreement rather than falling over a cliff at the end of negotiations.’
Mark Littlewood, director-general of the Institute of Economic Affairs, said Mrs May ‘is on track for a landslide victory’.
He added: ‘The lines in the Conservative manifesto about whether Brexit is hard, soft, clean, dirty or whatever will be the decisive part of the negotiation.
‘I suspect the Conservatives and Theresa May will commit to a pretty hard Brexit and win a mandate for it.’
Simon Derrick, a currency strategist at BNY Mellon, said there could be big gains for the pound following a Tory victory. ‘I don’t see why $1.40 by the end of the year isn’t in the realms of possibility,’ he added.
Kathleen Brooks, of trading firm City Index, said the prospect of greater political stability has given the pound a boost, adding: ‘Traders obviously see PM May as a stabilising force.’
‘Increased certainty for business’