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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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 Posted: Mon Sep 24, 2007 12:53 am Post subject: Snap UK General Election Before the Economic Slump Hits? - V |
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By: Nadeem_Walayat
The British press is full of gossip about the possibility of a UK General Election in October 2007. Though not all of the gossip is idle chatter as the party's election coordinator declared " Labour is ready for a general election, whenever Gordon Brown chooses to call one", in advance of Gordon Browns first party conference speech as Prime Minister.
This article analyses the reasons for and against a snap general election in October.
Reasons For an Election in October
The slump in the UK Housing market has just started and therefore the implications of which will not hit the headlines until later this year.
Gordon Brown is riding high in the opinion polls, still enjoying a honeymoon period after the British people were on the whole happy to see the back of Tony Blair. The tories are not helped by David Cameron who always seems to be one step behind, which was evident on his belated statement concerning the Northern Rock banking crisis. Therefore the tories probably fear a snap general election.
The credit crunch is not going to go away. The Northern Rock Bank run was a warning of its impact. The Bank of England has been ordered to pump as much money as is required to negate its immediate effects. However there will be longer term consequences of this action especially with regards the British Pound. The subprime mortgage resets are expected to hit both the UK and US hard during the next 12 months.
Gordon Brown is the only heavyweight on the Labour scene, his new chancellor is literally his Darling. Unlike for Tony Blair, who had to contest with the plotter next door!.
Despite Northern Rock, the British people still see Gordon Brown as economically competent, which is probably the greatest factor in his favour at this time and therefore strongly supports the view of an early election. Latest opinion polls put Labour well ahead of the Tories with Fridays YouGov poll for Telegraph putting labour on 39%, Tories on 33% and Lib Dems on 16%.
A snap election for which New Labour have been secretly preparing will catch both main opposition parties off guard. Especially given the turmoil in both parties as their leaderships have been questioned of late.
Reasons Against an Election in October
The foot and mouth outbreak refuses to go away. There is a risk of a wider outbreak during an election campaign that would count against New Labour. If the foot and mouth problems were not bad enough, now the tongues seem to have gone blue too ! It is early days to see what this actually means politically other than for more bad livestock headlines.
The credit markets are unstable as the interbank markets remain frozen .There is a lot of uncertainty out there that could result in further panics, and October is a month that is renowned for financial panics.
Labour finances are deeply in the red, with the latest figures available suggesting a debt of £24 millions. hardly the ideal position to be in, in advance of fighting an expensive general election campaign. However, if the tories were allowed time to prepared then they would likely be able to draw on proportionally more funds.
Gordon does not have to go to the polls until 2010, therefore if he goes now and loses, he could end up being one of the shortest reigning Prime Ministers in British history, which would probably bring a smile to at least Cherie Blairs face.
In conclusion, the reasons for an early election are far more compelling than the reasons against. Whether Gordon Brown will call an election is another matter. We shall know within the next 2 weeks, with the greatest probability of announcement being towards the end of the party conference.
VOTE NOW - Should Gordon Brown go for an October General Election ?
Yes - Because Labour would win
Yes - Because Labour would lose
No - Because Labour would lose
No - Because Labour would win.
Click Here to Vote Now (registration not necessary)
Click Here for Results so far.
Results analysis will follow in a weeks time.
By Nadeem Walayat
(c) Marketoracle.co.uk 2005-07. All rights reserved.
The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities. |
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