With just hours to go before Britain goes to the polls, people are getting nervous – and I don’t just mean the politicians. After the deepest recession in decades, and with government borrowing at record levels, many are wondering how the result will affect jobs, taxes – and our ability to pay our mortgages.
Historically, the bookies have been a better guide to the result than the opinion pollsters. But with the latter still predicting a hung parliament, many have warned of a collapse in a confidence. The markets hate uncertainty. Any suggestion that an incoming government was unstable, or didn’t have a clear policy, could affect the pound and the bond market’s view of UK debt.
But stay calm. Firstly, a hung parliament has been a real possibility for some time. Many will have factored it into investment decisions – and the markets have been relatively buoyant. Secondly, a coalition government doesn’t mean weakness of itself. Germany, with its coalition government, is seen as a model, whereas Greece, with a single party in charge, has seen its debt spiral out of control.
However, prolonged negotiations between UK parties would spell danger. The markets will need a firm steer on policy aimed at cutting the budget deficit.
Whatever the outcome on Thursday, we could do well to remember that Britain has never defaulted on a debt.
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