Theresa May's Disastrous Failure
Comment of the Day

June 09 2017

Commentary by David Fuller

Theresa May's Disastrous Failure

Here is the opening of this Bloomberg Editorial:

U.K. Prime Minister Theresa May's election gamble has faileddisastrously. The consequences are dire for her party and government, and could be equally bad for her country's relationship with Europe.

May had hoped to increase her Conservative majority in Parliament, and instead has seen it wiped out. The Tories are the largest party in the House of Commons and with the support of Northern Ireland's Democratic Unionists intend to form a government. Directing policy and passing legislation, however, will be vastly harder than before.

This would be a serious problem under any circumstances, as Britain's previous experience with hung Parliaments suggests. But these aren't just any circumstances. Brexit talks were due to start in 10 days. May's effort to prepare for that challenge has left her plans, such as they were, in shreds. The immediate prospect is great political disorder and maximum economic uncertainty.

Such is the humiliation of this setback that May might soon choose -- or be forced -- to resign. This offers no relief. The task of finding a new leader would only add to the chaos, and there's no obvious successor capable of uniting the party. But if she hangs on, the question of if and when she goes will linger. Her authority is irretrievably diminished.

David Fuller's view

The UK stock market could be quite relaxed with the General Election result because it reduces the possibility of sudden changes within the UK, provided of course that Labour has no real chance of forming a government. 

Currently, Theresa May has the support of the Northern Irish party (DUP), so she can form a government with a very small majority.  However, we can be sure that Labour will agitate, claiming that it ‘won’ and has the support of the people.

Nevertheless, the UK would be susceptible to selling pressure elsewhere during this often choppy seasonal period.  Note the FTSE AIM 100 Index which is particularly susceptible to a correction following its strong advance and overextension near the 5000 roundophobia level.  The USA’s Nasdaq 100 Index of big-cap tech shares has also defied gravity recently and is now experiencing some sharp downward dynamics.

(See also: ‘I’m sorry Theresa May apologises over election disaster but vows to lead country with ‘certainty’, from The Sun)

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