The political landscape remains turbulent within the European Union as the United Kingdom prepares for a snap General Election, set for 8 June.
It's been quite a volatile year for the Brits, following their narrow decision (51.9% - 48.11%) to exit the EU in the advisory referendum held in June last year.
But, how has the UK arrived at this next stop on the political carousel (the General Election, 2017)?
Today's article will review the patterns and decisions that have led to this historic moment. But don't forget to keep an eye on our upcoming articles in which we'll analyse the potential effect of the election on the financial markets before it happens and then follow that up with a review of its impact in the aftermath.
The Conservatives vs. Labour
Currently, the two dominant political parties in the United Kingdom are the Conservative Party and the Labour Party. In fact, these parties have been rotating power for decades.
Recent history has shown long streaks in power for both the Conservatives and the Labour Party. Here's a brief overview:
- 1979-1997: The Conservative Party. This period famously consisted of three consecutive General Election wins for Margaret "The Iron Lady" Thatcher.
- 1997-2010: Labour. Tony Blair's march to power in 1997 started a long period of dominance for the party, who remained in power until 2010.
- 2010-2017: The Conservative Party. The seesaw of the political pendulum swung back to the Conservatives in 2010, when David Cameron wrestled back leadership via an alliance with Liberal Democrat leader, Nick Clegg.
In the General Election of 2015, David Cameron was able to clinch a second victory in a row, but this time with even better parliamentary conditions, crossing the threshold of the 326 seats needed to obtain a majority. Nick Clegg and the Liberal Democrats, who lost 49 out of their 57 seats, were no longer needed.
Source: Wikipedia image showing popular vote by party in UK in General Elections, 1832-2005.
The 2013 Promise that Led to Brexit
In 2012, PM David Cameron still rejected referendum calls on the UK's EU membership, but by 2013, under pressure from his own MPs and with the rise of UKIP (United Kingdom Independence Party), Cameron's hand was forced into making the following, fateful campaign promise:
If re-elected in 2015, a Conservative government would hold an in-out referendum on EU membership.
David Cameron's subsequent election victory kick-started an avalanche of change. The outright Conservative majority meant that he was obliged to fulfil his pledge to renegotiate British membership in the EU.
More importantly, his negotiation work with the EU and the entire membership itself was put to the test in an advisory referendum, held in June 2016.
PM Cameron managed to negotiate several changes to the UK's membership of the EU, but a majority of the British population (51.89%) choose to leave the EU in the public vote. The remain voters (48.11%) were ultimately beaten by a slim margin of just 3.78%.
Despite the 'advisory' nature of the referendum, the political consensus in the UK led to the acceptance of the result as binding (no minimum turnout or win percentages were mentioned before the vote).
In the political chaos that followed, David Cameron stepped down as Prime Minister and left the chair open to new leadership.
Source: Wikipedia image showing the voting results in 1975 when UK joined the EU (left) and in 2016 when UK voted to exit (right).
New Political Faces Arise
Theresa May took over the Conservative Party leadership and the role of Prime Minister on 13 July, 2016. Although she supported the remain vote while campaigning in the referendum, May left no doubt that the final will of the people needed to be implemented without any second consultation.
The new PM worked hard on building a cabinet with new faces and even new positions. For instance, installing David Davis as the new Brexit Secretary, a position created to lead negotiations with the EU during the Brexit process.
The new Prime Minister developed the legal steps needed to prepare for the Brexit process. For instance, Parliament needed to approve the decision as well, which was sought and found in March, 2017. The triggering of Article 50, officially starting the withdrawal process, had already occurred by the end of that month.
The UK General Election, 2017
Although a General Election wasn't due until May 2020, PM Theresa May nevertheless called for a snap election in April 2017, which received the two-thirds majority it needed in the House of Commons to be passed into law. May indicated that a snap election was the "only way to guarantee certainty and security for years ahead." *
The upcoming General Election, which will take place on 8 June, 2017, will feature a range of issues and topics that are expected to be divisive, including:
- The UK's withdrawal from the EU, which is expected to be a key issue.
- Scottish independence and the future of the UK.
- Possible coalitions, if May's Conservative party doesn't win an outright majority.
What will happen remains to be seen. Regardless of the result, this landmark political event is likely to have an impact on the financial markets.
Be sure to keep an eye on our our dedicated election web-page where you'll be able to find dynamic analyses, current market sentiment and more free articles and webinars. Essentially it's your one-stop-shop, giving you everything you need to trade before, during and after the General Election.
We'll be giving you some top tips on how to trade through the election and we'll also be reviewing the result and how you could trade the aftermath.
Cheers and safe trading,
(*) "May to seek snap election for 8 June". BBC. 18 April 2017. Retrieved 18 April 2017.