December 13, 2019
The results are in: An analysis of the UK General ElectionContact
We now know the result of the 2019 General Election. But what does it mean for Brexit, for future trade agreements, for UK domestic politics, for Scotland and the power dynamic between the Government and Parliament. Instinctif Partners takes a first look…
What the result means:
- The Conservative Party has secured a clear Parliamentary majority following the yesterday’s General Election. Removing the Speaker of the House of Commons and Sinn Fein MPs from the count of seats leaves 642 seats and the Conservatives secured 364 MPs (assuming the Party retains the one outstanding seat of St Ives). This is a working majority of 88. Upon the news of the exit poll, the pound gained in value just under 10% against the Euro.
- The Conservative Party’s vote share is 1.2% up on Theresa May’s 2017 election result. But the Party’s strategy focused on seats where it could deliver a vote share well above this, enabling wins in constituencies in (now former) Labour heartlands. From a colleague at Conservative Campaign HQ: when the exit poll came in, the feeling of Team Boris was of shock and an explosion of delight over the notional swing.
- All parties’ vote shares went up, except the Labour Party, whose fell by nearly 8%. Jeremy Corbyn has already said he will not stand as leader at the next General Election. As commentators and the Labour Party move to analyse the results, he will come under pressure to step down more quickly. With Labour’s governing apparatus firmly in the hands of those on the left of the Party, it remains to be seen whether Labour Party will conduct an open and frank assessment of why it lost, and whether the desire to win next time around is enough to trigger a demand for a different policy agenda. Central to this will be whether the trade unions push for more pragmatism.
- With the Government having a healthy majority, and with the UK having had three General Elections in four and a half years, we now may not see the next one until 2024. We can expect Liberal Democrat leadership elections in early 2020; the same is likely for Labour, though it is contingent on the above.
- On the issue of the day, the Conservative Party will deliver Brexit by 31 January; perhaps sooner if the PM confirms it in the next few days. The margin of victory gives the PM space not only to pass the Brexit withdrawal agreement, but means that for future trade discussions, he will not be under so much pressure to actively involve Parliament. Ironically, EU member state leaders were meeting yesterday and today; while any chance of avoiding Brexit evaporated last night, the EU will have welcomed the promise of a more stable negotiating partner.
- On the future trade arrangement with the EU (and other non-EU countries), it is hard to know if this will allow Johnson to bypass the most Eurosceptic elements of his Parliamentary party or whether it gives him the freedom to take a tougher stance towards the EU.
- We believe that Johnson will seek to take a strong line with the EU, seeking a wide-ranging free trade deal but with limited regulatory alignment, such as through mutual recognition. In sectors like medicines, both sides may be happier to do this. While on services, the EU may withhold (parity of) access unless they can secure compromise elsewhere. Indeed, the EU will be wary of a Singapore-like UK as its neighbour. In spite of this, Johnson will – we think – seek to push this through quickly; it remains to be seen whether he will be able to seal a comprehensive deal by the time the Brexit implementation period expires on 31 December 2020. Business will hope for more notice about whether a trade deal can be secured by the end of next year (or whether an extension of the transition period is required), so the threat of a deferred, de facto No Deal Brexit (trading on WTO rules) is minimised.
- The Conservative Party will represent more seats where arguably the consequences of austerity and the tightening of state expenditure can be seen first-hand. Boris had signalled an easing of austerity anyway, but this new footprint will demand this if those seats are to be retained next time around. The Conservative Party, despite being electorally successful yesterday, will have to change in this regard and this may trump the Party’s natural free market instincts. Expect a more interventionist, populist domestic agenda built around One Nation Conservatism to continue therefore, not least because the manifesto will have to be fulfilled. This means a focus on bread and butter issues (immigration, crime, security, public services, better transport), alongside prioritising infrastructure spending and more devolution of power to the regions and cities of England.
- Previously (in addition to Brexit), the Conservatives announced what they would do in the first 100 days in office:
- A budget in February that will bring in the Conservatives’ plan for a rise in the national insurance threshold, which amounts to a tax cut of around £85.
- Legislation to end the automatic release of serious violent and sexual offenders at the halfway point of their sentence.
- Launching the biggest review of defence, security and foreign policy “since the end of the cold war”.
- New laws to fund an increase in education spending, raising the minimum funding per pupil.
- Increasing the amount that new immigrants pay to use the NHS to £625 a year.
- Attempting cross-party talks to find a solution to the social care crisis.
- Seeking an agreement with mobile phone operators to improve the service in rural areas.
- In order to seriously challenge Government legislation, the opposition to the Conservative Party in the Commons will have to work together and put aside differences.
The impact on Scotland:
- The SNP will push for a second Scottish independence referendum with renewed vigour. Boris Johnson has previously ruled out granting permission for a second vote while he is Prime Minister. The Scottish First Minister, Nicola Sturgeon, however, has already said she will request a ‘Section 30 order’ before Christmas in order to hold a second independence referendum next year. If Sturgeon does this, Boris would certainly not welcome this and would seek to oppose any 2020 public poll.
- If this happens, the SNP may look to 2021. Indeed, if the SNP make similar gains in the May 2021 Holyrood elections as they did last night – and secure a majority in Holyrood – Johnson will come under increased pressure to consent to a referendum. Yet he values the Union, and selfishly, he will not want to make the same tactical mistake as David Cameron did in getting drawn into authorising a referendum.
- This issue, of course, links to Brexit. Johnson will not want a deferred No Deal Brexit in December 2020, nor even for the negotiations with the EU to be able to be characterised as in stalemate, by the time of Scottish elections in May 2021. By that point, he will want a more positive story to tell about the UK’s relationship with the EU (and rest of the world).
- But back to the here and now: Boris Johnson has proved he is once again an election winner, and with that, power has returned from the House of Commons to the Government. Over the next couple of days, we are likely to see a very limited reshuffle (at the least, a new Culture Secretary and Environment Minister are needed) and then a Queen’s Speech (part II) on Thursday, which will largely be a repeat of the one held on 14 October. Next year, we are likely to see a February Budget, a wider reshuffle and a Comprehensive Spending Review which sets out Government expenditure in the early part of the 2020s.
Click to view our mock ‘People’s Government’ manifesto.