The pound dropped significantly as the news broke this morning that after extensive campaigning, we were left with a hung parliament. Despite this, business has remained as usual and the City hasn’t crumbled around us!
As with last year’s Brexit vote, the uncertainty that follows a governmental shock permeates into all of our lives in some way. Businesses in particular will be wary about making big decisions until they know the true ramifications of this clear lack of confidence in our current government. But it’s important to remember that the Conservatives still hold a majority and are the governing party.
The biggest question on the tip of every conversation today is whether or not Europe now has the upper hand in forthcoming Brexit negotiations, an upper hand it may not have had before the snap election; the result today raises lots of questions over the direction in which the UK is going.
Is it really that much of a disaster? The FTSE opened this morning, there wasn’t much of a reaction. This is mostly down to the fact that the Conservatives are still in power and will continue to be during the negotiations, it does however make the hard Brexit Theresa May promised, less likely – which could be another positive to the hung parliament.
The latest news is that Theresa May will form a government with the Democratic Unionist Party, the pound has recovered slightly this afternoon as afternoon trading got underway. Commentators believe this is because there may be a new Brexit strategy on the horizon which could see more support for the pound in the coming months, during negotiations.
Not everyone in the City is downbeat about the result of a hung parliament, and other commentators have found a silver lining in the possibility of a softer Brexit. Though it’s a cliché, realistically only time will tell what the election means for the economy.