The aftermath.

8th May 2015

Ian Copelin, Investment Director, my wealth comments: “With a handful of seats left to declare, the result of yesterday’s general election is nothing like the pundits had been forecasting, with David Cameron looking like he will remain Prime Minister.

In the run-up to yesterday’s election, every opinion poll had indicated the Conservatives were neck-and-neck with Labour, with both parties well short of a House of Commons majority, leaving the country facing weeks of uncertainty as the parties tried negotiating a functioning government.

In fact the Conservative Party appear to have actually increased their number of seats from their 306 in the 2010 election. This is the first time since 1983 (when the Conservatives were under Margaret Thatcher fresh from the victory in the Falklands War) that the incumbent party has increased the number of seats held.

However, at the time of writing, it is unclear if the Conservative Party will reach the magic number of 326 seats – whilst the UK has 650 constituencies, meaning that technically a party will need 326 MPs to form a majority in the House of Commons, either on its own or in a coalition, in reality the number of seats needed is a few less. This is because the speaker must resign from their party and he and his three deputies must be politically impartial. In addition, although the Irish republican party Sinn Fein lost one seat in yesterday’s election, they will still have 4 MPs. However, to date, despite having elected MPs, Sinn Fein has refused to take up any of their seats.

While nothing has been announced, even if the Conservative Party doesn’t reach a majority, it is likely that they will form a minority government and use smaller parties, such as Northern Ireland’s Democratic Unionist Party (DUP) to support votes on specific matters, rather than getting them to back their full agenda and running the government together.

Although it was like a tsunami in Scotland for the Scottish National Party (SNP), as they won 56 of the 59 seats available, they may be slightly disappointed: despite having won the seats, the SNP hasn’t won the power they had hoped for due to the unexpected strength of the Conservatives (in the run-up to the election the SNP was expected to play a key role in a Labour government).

Thanks to the strength of the SNP and the weakness of the Liberal Democrats (which appear to have lost all but around 10 of their 57 seats), it will be a very different parliament, with many of the big old names wiped away. These include Douglas Alexander, the Shadow Foreign Secretary, who lost to a 20 year old student, Mhairi Black standing for the SNP! Others to lose out to the SNP include Jim Murphy the Leader of the Scottish Labour Party and Danny Alexander the Liberal Democrat who was Chief Secretary to the Treasury in the last government. Vince Cable, the Business Secretary was defeated by the Conservative candidate, Dr Tania Mathias, while the Shadow Chancellor, Ed Balls, lost to the Conservative candidate, Andrea Jenkyns.

The removal of uncertainty surrounding the likely make-up of next government has sent both the pound and the FTSE-100 sharply higher this morning (currently up 115 points at just over 7,000), with banks, utility companies and house builders among the best performers. Lloyds Banking Group and Centrica are both up as much as 6%, while Persimmon is up 5% and United Utilities is up 3.5%.

Equity markets are confusing at the best of times due to the myriad of economic and corporate news. Add currency fluctuations and politics to the mix and it has the potential to become a complete nightmare! We have a dedicated team of investment professionals monitoring global markets and managing client portfolios. As we believe risk management is just as important as investment management, our client portfolios are diversified across a range of geographies, sectors and stocks to ensure client portfolios are able to participate in all areas of the global market and thus avoid the risk of owning just one investment or one geography.