UK elections: the perfect blue wave

For over an hour now it has been clear what was already apparent last night in the exit polls: the Conservative Party, led by Boris Johnson, won the parliamentary elections with a large majority. The party managed to win 362 seats (plus 66), the largest absolute majority for the Tories since 1987, then under Margaret Thatcher. The Labour Party, on the other hand, suffered heavy losses, as did the Liberal Democrats. Jeremy Corbyn has already announced his resignation, while LibDems leader Jo Swinson has even lost her constituency. The only big winner alongside the Conservatives is the Scottish SNP, which has managed to make significant gains. Party leader Nicola Sturgeon has already announced that she will use this victory to push ahead with her plans for Scottish independence.

The new parliament will look radically different. While the conservative faction is likely to become much more homogeneous and the inner-party quarrels may not have come to an end, but are likely to be much less pronounced, the opposite is true within the opposition parties. Corbyn’s already announced voluntary resignation and the involuntary departures of Jo Swinson and Nigel Dodds (spokesman for the Northern Ireland DUP faction who has lost his seat to Sinn Fein) will lead to leadership debates that will keep the parties busy for months to come.

The Prime Minister now has a clear run for his oven-ready Brexit, and nothing should stand in the way of the ratification of the withdrawal treaty he has negotiated. On 31 January 2020 the British will leave the EU in an orderly process, and at least this inglorious chapter is finally closed. As was to be expected, the British pound has acknowledged this development with significant gains and should benefit from a positive underlying mood at least in the coming weeks. But even though Johnson has undeniably achieved a major victory, the British Government will be facing major challenges in just a few months‘ time. Because after the Brexit is before the Brexit. To be more precise: a regulated withdrawal on 31 January 2020 will only give the British (and us) eleven months of rest. During this period, the EU and the UK will work flat out to put a free trade agreement on their feet. But even the biggest optimists assume that this process will take years and that it will not be possible to have an agreement in place by the end of 2020. Johnson’s clear election victory could even become an obstacle here. Because the new (old) prime minister now has a clear mandate at home for the Brexit – in an emergency also a hard Brexit. He will position himself clearly in negotiations and accommodate the EU as far as absolutely necessary.

If it becomes apparent in the course of next year that an agreement on an FTA by the end of 2020 is not realistic, Johnson has two options: He can either apply for an extension of the transition phase and thus buy his country more time, or he can take a hard line and in the worst case risk a hard Brexit at the end of the year. So far, we expect him to take the first route. But his surprisingly clear victory tonight will reinforce the Prime Minister’s radical stance on Brexit issues and increase the risk of a „no deal brexit with announcement“ at the end of 2020. The euphoria of the pound over Johnson’s election victory is therefore likely to be relatively short-lived.

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