[Market implication: UK assets up, sterling up, and gilts down]
This election is all about Brexit. That means old vs young, town vs city. My view that is Boris will get roughly a 40 seat majority (see Chart 1). The most credible YouGov poll predicts 68, but I think that’s too bullish given that in about 30 seats Labour is less than 5% behind the Tories. Five reasons why I think Boris has got this one:…
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[Market implication: UK assets up, sterling up, and gilts down]
This election is all about Brexit. That means old vs young, town vs city. My view that is Boris will get roughly a 40 seat majority (see also Chart 1). The most credible YouGov poll predicts 28. Five reasons why I think Boris has got this one:
(1) The Tories are clearly positioned on Brexit. Labour isn’t. That might cost Labour more votes in the North and Midlands than the Tories will lose in the South. Alternatively, look at Scotland and the double question of Brexit and IndyRef2: those who like “Remain/Yes” will vote SNP. Those who like “Remain/No” will vote LibDem. And everybody else will vote Tory. Nobody ends up picking Labour.
(2) On the non-Brexit issues, the Tories have taken the fight to Labour’s home turf in a pincer movement focused on ending austerity and promoting the NHS. This left Corbyn no choice but to differentiate himself via radical policies, which isn’t going down well with sensible Remainers.
(3) Boris got a boost from Farage not fielding candidates in the 317 seats that the Tories won in 2017. So, while the Leavers have effectively struck a ‘unilateral alliance’, the People’s Vote campaign is fighting a fully blown civil war.
(4) With students out on term holidays on 12 Dec, I wonder, will they remember to vote? The elder citizens certainly will. In fact, most Conservatives I know haven’t yet recovered from the 2017 shock, so they will make an extra effort to tick their box.
(5) The Tory campaign has been the more fun/positive. I found this one-liner especially witty: ‘Let’s go Corbyn-neutral by Christmas’. It may not sound like much, but people are in need of a positive attitude to break the Brexit doldrum.
The market implication of a Tory majority would be UK assets up, sterling up, and gilts down.
Finally, one important final thought: people like Labour’s policies, which tells you that economic policy will continue to move left (as it already has). People just don’t trust Corbyn. It’s the person, not the policies.
Chart 1
Bobby Vedral is a macro-political analyst who runs MacroEagle. He is also the UK representative of the German Economic Council (Wirtschaftsrat Deutschland) focused on the German-British relationship post-Brexit. Bobby left Goldman Sachs in March 2018, where he was a Partner and Global Head of Market Strats.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)