PM Calls Snap General Election

Latest developments:

  • UK Prime Minister Theresa May has announced plans to call a snap General Election on 8 June.
  • Decision has shocked the political establishment and capital markets with the PM previously showing little appetite for an election.
  • PM needs Parliament's backing to hold a vote before the next scheduled date of 2020. A Commons vote has been slated for tomorrow.
  • Latest polls give the Conservative Party a 21-point lead.
  • Jeremy Corbyn has welcomed the election despite party polling at record low levels.
  • Pound rises while markets suffer worst slump since Brexit vote.
  • Tory election guru Sir Lynton Crosby brought in to lead Conservative campaign.
  • EU says the election will “not change plans” for UK’s exit.


Market Reaction

FTSE 100: 7,200.23 -1.74%
FTSE 250: 19,340.13 -0.95%
POUND: 1.26 +0.8%
(Figures correct as of 1pm 18 April 2017)

  • Pound hits two-and-a-half-month high
  • FTSE 100 poised for worst day since Brexit vote
  • FTSE 250 also suffered sharp losses
  • UK 10-year gilt yields rise by one basis point following the announcement


What The Polls Say

Con – 44%
Lab – 23%
LD – 12%
UKIP – 10%

  • Commentators predicting landslide victory for Conservative Party
  • Latest polls show 20+ point lead for Tories
  • Conservatives projected to win 400 seats, a majority of 150


Headland’s Analysis

“The lady’s not for turning” was a phrase associated with one British female Prime Minister. Following this morning’s surprise announcement, it’s no longer a phrase that can equally be applied to Theresa May.

For months, she has played down the prospects of an early poll. However, three inescapable chunks of logic have been screaming at her and her close-knit team of advisers inside Number 10.

First, the blunt reality of governing with a parliamentary majority of just 17 has meant Tory backbenchers have already exercised their power to force government to back down on different measures.

Secondly, the polls could hardly be better – two have recently put the Conservative lead over Labour by 20 points or more.

Thirdly, and most important of all, Brexit. Everything is about Brexit. The Prime Minister claims a new mandate will strengthen her hand in negotiations with Brussels. Her line that “the country is coming together but Westminster is not” is more about a desire to make her vision of Brexit a central plank of the election – she wants the 52% of the country who voted to leave last year to vote Conservative in June, plus she wants to win over those who voted to remain but are the “accepting pragmatists” now.

However, if recent events have taught us anything, it’s that politics in these times are highly unpredictable. Who would have thought that the vicar’s daughter.

Political Reaction

Jeremy Corbyn, Leader of the Labour Party responded: “I welcome the Prime Minister’s decision to give the British people the chance to vote for a government that will put the interests of the majority first. Labour will be offering the country an effective alternative to a government that has failed to rebuild the economy, delivered falling living standards and damaging cuts to our schools and NHS.”

Tim Farron, Leader of the Liberal Democrats responded:
“This election is your chance to change the direction of our country...Only the Liberal Democrats can prevent a Conservative majority.”

Nicola Sturgeon, Leader of the SNP said: “This announcement is one of the most extraordinary U-turns in recent political history, and it shows that Theresa May is once again putting the interests of her party ahead of those of the country. She is clearly betting that the Tories can win a bigger majority in England given the utter disarray in the Labour Party.”

Paul Nuttall, Leader of UKIP responded: “We welcome the General Election, but make no mistake - it is driven by Labour's obvious weakness, not the good of the country.”

A spokesperson for Donald Tusk, President of the European Council said: "The UK elections do not change our EU27 plans. We expect to have the Brexit guidelines adopted by the European Council on 29 April and following that the Brexit negotiating directives ready on 22 May."

What this could mean for the Conservative Party

Opportunities

  • A stronger hand in Brexit negotiations. The heavy lifting is due to start shortly, with the EU set to approve formal guidelines.
  • A weakened Labour Party. Jeremy Corbyn may have welcomed the announcement, but many Labour MPs will not share his enthusiasm with the party haemorrhaging support in recent months.
  • Tory backbenchers. With only a small majority, the PM has been under increasing pressure from her backbenchers. Forced U-turns in the Budget. Demands for a parliamentary vote on at the end of Brexit negotiations. These and more can be avoided with a larger parliamentary majority.
  • Scotland. Conservatives are enjoying something of a revival and this is a chance for Ruth Davidson, the popular Scottish Tory leader, to test her messaging.

Threats

  • A Lib Dem resurgence. It was only this weekend that pollsters had speculated a surprise victory for Farron’s party in the super-safe Labour seat of Manchester Gorton in the bi-election. South-West Tory MPs will be particularly concerned by the revival.
  • Northern Ireland. The current political impasse just got messier.
  • The polls are wrong. Recent elections have proved extremely hard to predict.
  • Article 50. Critics will argue that the short timetable to secure a good deal on Article 50 just got even shorter.
  • Boundaries. The current review of constituency boundaries has not yet concluded, so the election will likely take place under old boundaries. We could see a lot of MPs confused about where, and if, they stand.

What happens next?

A two-third majority of 434 MPs will be required to pass this motion, if the Prime Minister is to successfully override the Fixed-Term Parliaments Act. Cross-party support will therefore be required, given that the Conservatives currently hold a 330-strong majority.