If voting changed anything – they would make it illegal
Emma Goldman – Russian/American anarchist
First there were two, then three, and now there will be four major UK political parties. No wonder it’s getting more and more difficult to make predictions for the UK election. The two “old” parties are both far from their historic support levels, and every new General Election they get diluted by newcomers to the scene. The LibDems have of course been around for a while now, but their rise created the hung parliament in 2001.
This time it’s becoming a Scottish election as the SNP looks to gain 41 new mandates while the Tories will lose 19, Labour will gain 15 and the LibDems lose 32 mandates.
This leaves the major parties miles from the 326 seats needed for a majority government, but even more confusing, even the likely coalitions are short of a majority:
Tories + LDP = 283 + 24 = 305 or Labour + SNP = 271 + 47 = 318
A further 19 mandates are available but are split down the middle.
A lot can happen between now and May 7th but due to “first past the goal post” rules in the UK a change in overall percentage vote share rarely changes the overall result. Note how the UKIP party with 23% of the popular vote might get only one or two mandates, while LibDems with far less votes will get 18. No wonder there is call for a new electoral law in the UK!
There is a tendency to run an election based on the concept: “It’s the economy stupid”. This however has some potential downsides. In the UK they talk about the 1945 effect – Tories won the war with Churchill but were out of office by 1945 despite doing the hard work.
Similarly now the Tories are running a dangerous campaign calling for the voters “not to let Labour ruin the economy”
The Tories/Lib. Dem coalition has stabilized the UK but the current account deficit is out of control, meaning effectively that the improvement has been borrowed. Still, they point to job growth, slowly rising wages and UK’s relative GDP improvement.
The Labour Party have moved their rhetoric back to the 1970’s, fighting for redistribution of wealth, wealth taxes and all the old-school policies which were so dominant during big business, big tax, no growth and over-unionized labour markets. This is a strategy that suggests a world of zero growth – again, arguing for redistribution rather than a path to new growth.
Still, Labour’s platform does address the ugly growing extremes in inequality that have resulted from an aggressive monetary policy of low rates and support for the 20% of the economy which is large, publicly-traded companies and banks. Meanwhile, the 80% of the economy, the small- and medium sized enterprises (SME’s) and middle- and low income earners everywhere are all worse off than ever.
I think this election will be decided on two things: Inequality and how many mandates UKIP will get on May 7th.
The UK economic numbers may look okay on the surface, but inequality is hard to run from as the 80% have been the biggest losers since the financial crisis started. The problem for the Tories is that these 80% are also the middle class, the voters who are politically engaged. They feel left behind and I am sure also frustrated with the lack of change and hope. This makes UKIP an interesting alternative. They are the “protest party” for many of these voters.
We know from France and Spain how parties deemed to be ‘extreme’ fare relatively poorly in polls, but behind the curtains in the voting both people voters are far braver at expressing their political opinion.
An Electoral Calculus table suggests that with 20 per cent of the national vote (they have polled as high as 23% over last two years), they could win eight seats; 24 per cent would produce 46 mandates.
Finally we need to address the elephant in the room which is that we are likely to see this UK General Election only as the pivot point leading to a UK referendum on the EU. A UK exit from the EU is the single biggest threat to EU’s future and significantly more important than whether we see a Grexit or not.
The UK is the anchor of most liberal European countries. Certainly for Denmark, Sweden and Netherland. We all count on UK to step up when Brussels and often Club Med gets too busy handing out “presents” paid for by Europe’s tax payer. Losing the UK in the EU will not only render it rudderless but also create a massive need for the European financial industry to redefine itself.
This UK election will mirror many election around Europe since the crisis started in focusing on the inequality and the need for a political protest. This opens for big moves in the mandates.
I foresee Scottish National Party and UKIP protest votes will prove far more numberous than the latest polls suggest.
This will lead to likely Tory + Liberal Democrat coalition supported by UKIP. The UKIP support will come with UK referendum on EU in 2016. This opens a can of worms as the EU will have to fight for its life by as it juggles the potential fallout from a Grexit, Brexit and QE-exit.
By Steen Jakobsen, Chief Economist at Saxo Bank