Do UK political defections and BREXIT matter to financial markets?
British politics isn’t having an easy ride. Recent defections from both Labour and the Conservatives will diminish further the power both leaders have over their parties. Is this political turmoil significant for financial markets, though?
Some Labour politicians and Conservative politicians (at the last count) have resigned from their respective parties and are sitting as independents.
Broadly speaking they believe that their parties have been hijacked by the extremes. They are currently under no obligation to resign as MPs, although a number of them were in danger of being deselected as candidates at the next election anyway.
In the end, probably nothing – most people vote for party not candidate, anyway. In all likelihood, these MPs will disappear from view at the next election. The British political system makes it very difficult for new parties to emerge – particularly new centrist parties.
This isn’t the first time this has happened. A few of us might remember the Social Democratic Party, led by four serious politicians (David Owen, David Steele, Shirley Williams and Roy Jenkins) – far better known than the current crop. And they made relatively little headway.
Of course a new centrist group might prove to have more staying power in the current political environment. But history isn’t on their side. And nor, you’d guess, are the Liberal Democrats who will claim that they already occupy this particular piece of high ground.
I believe it means relatively little for financial markets. This group would probably have voted with their consciences on Brexit, so it’s not clear that resigning the whip matters much at this point.
On the fate of the next government, maybe it’s positive for Corbyn and his Labour project, but again, you’d guess that these MPs will struggle against whoever represents Labour/Conservatives against them next time.
Recent events are certainly very interesting, but the base case is that they’re not going to change the face of British politics (for better or worse) or the outlook for global markets. So we’ll stay focused on other things, for me it is the better patient experience and safer care.