Simon Ward, Chief Economist, gives his view on the UK Prime Minister’s call for a snap general election
The decision to call a general election increases near-term uncertainty and has little upside for markets – a strengthened May government would be no more likely to obtain concessions in EU negotiations. The Conservatives (Tories) are likely to campaign on a “hard Brexit” manifesto that could actually limit Mrs May’s future room for manoeuvre. The risk is that the Tories significantly underperform their current impressive poll lead, weakening rather than strengthening Mrs May’s position. Voters may view the calling of an election after previous strong denials as opportunistic, and the economic backdrop is far from ideal, with GDP slowing and surging inflation squeezing real earnings.
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