Investor uncertainty as UK braced for hung parliament

YouGov poll suggests outcome that could lead to further Brexit stagnation

The UK could be heading for a hung parliament according to a YouGov poll.

The Times poll suggests the Conservatives are on course to win 339 seats against 231 for Labour in the general election on December 12.

While this majority would be enough for Boris Johnson to stay in power, it is 20 fewer seats than predicted in a similar survey on November 27.

In this latest poll, possible outcomes range from 367 Tory seats to only 311. This means “we cannot rule out a hung parliament”, according to Anthony Wells, YouGov’s director of political research.

The YouGov poll, which accurately predicted the election outcome two years ago, is well respected by investors.

A hung parliament, where no party has an absolute majority, could spell further delays to Brexit. This in turn could lead to yet more economic instability.

The prospect of a Labour government could also spell bad news for investors. They think Jeremy Corbyn’s economic plans to nationalise rail and energy industries and offer free broadband would see an increase in public borrowing.

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“Anything sub-340 [for the Tories] will not be welcomed by the market,” Jordan Rochester, a currency strategist at Nomura in London, told the FT.

Investors certainly showed their anxiety this morning when the FTSE 100 saw a slump. It has since rallied, but is still down 0.085 per cent at 7,206.7 points at the time of writing.

The FTSE 250 is also down, dropping by 1.09 per cent to 20,555.37.

The pound fought back after a small dip to 0.11 per cent up against the dollar at $1.3172. It is relatively unchanged against the euro at €1.187, which is a drop of 0.08 per cent.

With fears over a hung parliamen, investors could take a bearish stance again sterling.

Recommended reading: Sterling hits new seven-month high against the US dollar

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