So it’s over. The UK General Election 2019 is done and has delivered a decisive victory for Boris Johnson, set for a substantial majority having routed Labour in their traditional Northern heartlands and largely seen off the ‘Remain Alliance’ in the South. The UK leaving the EU on January 31st is now a certainty while prospects of a second referendum or another General Election within 5 years look dead and buried.
The reaction amongst markets and business is certainly positive. At the time of writing, the morning after the election, the £ is up around 2% against major currencies, the FTSE up 1% with double-digit gains amongst banks and property companies. Business people and commentators are talking up a new age of certainty, with property professionals in particular, including of course mortgage brokers, sounding particularly bullish. In the short to medium term at least Boris Johnson’s resounding victory seems only good news for business.
What comes after January is perhaps less clear. No one seriously thinks the UK can negotiate a full trade agreement by the end of 2020. The hope is that with such a large majority Boris can safely extend the transition despite having promised numerous times he wouldn’t do so. The post-election strength of the ERG will determine whether he can get away with it.
Boris has also promised a raft of eye-catching policies and reforms and has dropped numerous hints around stamp duty which could really boost the property market. With the £ strengthening, the appeal of UK property to overseas investors may dim a little although this could well be offset by the general surge in confidence this rise in the £ indicates.
A strengthening £ is often a sign investors expect interest rates to move upwards. All eyes will be on the Bank of England to see how they react to the post-election landscape and subsequent Conservative policies. A base rate rise early next year can no longer be ruled out.
A dramatic night which has redrawn the political map in the UK and ultimately Europe. Truly getting Brexit done is going to take a lot longer yet and there’ll inevitably by further twists and turns. For the time being at least, confidence is well and truly getting the vote.