Pound surges as traders welcome Tory victory

SO, the City has got its man. Shares, currencies and bond markets rejoice. It was the result for which investors had barely dared dream: not just an immediate, stable Government (always the most important factor) but a Right-leaning one without Lib-Dem interference.

However, business should applaud the work done by three Lib-Dems all now queuing up at the Job Centre: Vince Cable, Danny Alexander and, at pensions, Steve Webb.

The Royal Mail float aside, Cable was a good business minister. He won the trust of bosses, formed a much-needed long-term industrial strategy for key industries and did more than anyone to get women into boardrooms.

Alexander was a huge talent at the Treasury, making austerity less painful for the poorest. Webb was the longest-serving and most radical pensions minister for years, increasing the retirement age, creating the triple-lock rise to state pensions and, of course, freeing up annuities. The last two need careful implementation in the coming years. Who else has the experience to oversee that successfully.

Caught napping

A FAIR few thousand City folks have been chugging back even more coffee than usual today. These are the valiant ladies and gents who volunteered for, or were dumped with, doing the overnight election shift.

Markets moved dramatically as the bulls rejoiced at a Tory victory. I say “markets” — that should really be “market”. Despite the fact that this election lark happens only once every five years, despite the fact that the polls in the past week have been closer than ever before, despite the fact that the policies of the various potential governments were so diverse, only the currency market was open for trading.

In 2010, the multi-trillion-pound futures markets for gilts, short sterling and the FTSE 100 index opened for business at 1am on election night, giving investors a chance to brace their portfolios for the likely Tory-led Coalition and all that would mean for the economy.

These are popular markets more complex and less prone to the pound’s puppy-like exuberant reaction to every new stimulus. Trading was brisk from around the world. Money was made.

But that was before Liffe, the London International Financial Futures Exchange which runs them, was taken over by the Intercontinental Exchange.

The decision was made not to bother this time around. Traders and analysts I spoke to through the night were rather miffed.

Not just because it meant their mates in fixed income were tucked up in bed. But because it meant seismic events for one of the world’s biggest economies could not be traded on. A silly decision.