UK vote sparks uncertain outlook for financial sector
london — Financial markets dislike uncertainty but were handed a hugely clouded outlook on Friday after the Conservative party of Prime Minister Theresa May lost its parliamentary majority in Britain’s snap general election.
Traders and analysts in the City of London financial district spoke about feeling jaded, not just because they were up all night awaiting the results but because the UK’s second shock election result in a year throws the nature of Brexit talks into yet more doubt.
The initial reaction to the general election outcome has been to send the pound plunging.
However this propelled the London stock market higher as a weaker pound boosts the FTSE 100’s numerous multinational companies that earn in currencies other than sterling.
“Everyone is a bit tired,” said Neil Wilson, senior market analyst at trading group ETX Capital.
“There are a lot of uncertainties,” he told AFP from his company’s offices soon after the start of London trading.
While the Conservative party came first, it lost its parliamentary majority, and is now set to secure the support of Northern Ireland’s Democratic Unionist Party (DUP) and its 10 seats to push it over the line. May called the election in April in an attempt to extend her majority and strengthen her Brexitnegotiating position, but her gam- ble backfired spectacularly, triggering fresh concern for the financial sector and businesses.
“The City of London would wish to see an effective and secure government formed as soon as possible,” said Catherine McGuinness, the body’s policy chairman. “Markets do not like instability. It is also important for the prospect of successful Brexit negotiations that we have certainty in the political system,” she added in a statement.Leftist opposition leader Jeremy Corbyn, whose Labour party surged from 20 points behind in the opinion polls, has told May to quit after she “lost votes,
The question now is Theresa May’s future obviously, it looks like rejection of a hard Brexit Kevin Hector, Swiss bank UBS
lost support and lost confidence”.
“I think Corbyn was underestimated massively,” Kevin Hector, a fifty-year-old worker at Swiss bank UBS, told AFP on Friday. “The question now is Theresa May’s future obviously, it looks like rejection of a hard Brexit.”
A so-called “hard” Brexit would see Britain’s departure from the single market or tariff-free zone, while also ending the free movement of people.
“We might have a softer version of Brexit, a smoother transition,” noted Wilson at ETX.
The past year has seen plenty of surprises in Western politics following presidential victories for Donald Trump and Emmanuel Macron in the United States and France respectively, while it is almost 12 months since Britain voted in favour of exiting the European Union.
“What happened in the US, the UK referendum, nothing is a surprise anymore,” concluded Richard as he made his way to work in London on Friday feeling pessimistic.
“It is not a good news,” he said. — AFP