Published in Insights, The New Zealand Initiative’s newsletter, 8 May 2015
Republished in Business Spectator (Melbourne), 8 May 2015
As we send out this Insights newsletter, votes are still being counted across the United Kingdom. The national exit polls show a surprise lead for Prime Minister David Cameron’s Conservatives. None of the opinion polls before the election had predicted anything like that.
However, exit polls could turn out to be unreliable because we are not dealing with a two-party system any more. Nor are we dealing with a uniform swing but with diverse developments in different regions, further complicated by tactical voting.
Which is to say that commenting on the UK election at this stage is highly speculative. Let me do it anyway.
It is still possible if not likely that Britain will be left with a hung parliament, potentially leading to a minority government led by either of the two main parties. We can also expect Scotland to be dominated by the Scottish Nationalists (SNP).
From here on, strange possibilities arise. Should Labour manage to enter into an arrangement with the SNP (unlikely but not impossible), it could well pave the way towards a second referendum on Scottish independence.
This would not be without its ironies: Should Scotland eventually secede, Labour would lose power in Westminster to the Conservatives. A new Conservative government might then lead the rump-UK to leave the European Union – while Scotland would be trying to join it.
The other, more likely possibility is for the Conservatives to lead a minority government. That would not be straightforward either as the Conservatives would need to cobble together support from their Liberal Democrats coalition partner and bring in some extra support from Northern Irish MPs and maybe even the United Kingdom Independence Party. Not the most likely of political bedfellows.
Such a Conservative-led government might not last long. But the Tories would not be unhappy about that since Labour would sink into chaos after their poor election result. After all, their wipe-out in Scotland and the failure of their recent lurch to the left would create leadership discussions.
Britain would go back to the polls, perhaps this time producing an absolute Conservative parliamentary majority. Of course, Prime Minister David Cameron may then still have to conduct his promised ‘In or Out?’ referendum on EU membership.
So in summary, it’s complicated. Unless, of course, exit polls are right and allow a continuation of the Conservative-Liberal Democrats coalition by the narrowest of margins.
Eventually, once all the political dust has settled and Britain gets a stable government, we could talk about some more interesting questions. Such as how to deal with £1.5 trillion of public debt or a budget deficit larger than Greece’s.
But that requires even more speculation than predicting the election result.
