We are now just over a week away from the UK’s general election and the outcome remains as clear as mud.
The polls remain unchanged within the statistical margin for error and show the top two parties within spitting distance of each other. The leaders of both are ramping up the promises which they and the entire electorate know they cannot keep and the entire process is beginning to make a playground spat between two gangs of 12-year-olds from parallel years look like a mature and considered confrontation.
I wrote at the beginning of the year when the first shots were exchanged that I would not enter the game of a five-month election campaign and that, as far as I was concerned, it was a fair fight between two losers – an election in which the lesser of two idiots would win. At this moment in time, with just a week to go and although I dislike the ideology of one of the idiots more than I do that of the other one, I struggle to pick a winner.
Anyhow, with the SNP threatening to impose the Greek principle of “We have a mandate to abolish austerity” upon a country which it: A) wishes to see as being a foreign one as long as it B) guarantees its own deficits (try to square that one) and with the eurosceptic UKIP in a position to take up to 15% of the English votes without winning more than one seat, the outcome will in all likelihood be unclear.
I would still not entirely rule out the possibility of either a minority government under either side or even the formation, if only temporarily, of a grand coalition. As a senior strategist in a London house reminded me last week, Germany isn’t doing all that badly on the back of a grand coalition between the CDU/CSU and the SPD, is it?
Having flirted with a career in politics when I was still young, idealistic and impressionable, I can confirm for those who were never afflicted by such a weakness that the confrontational rhetoric in the debating chamber generally does not stretch into the bar. The “off-line” differences between the parties are generally much smaller than they look through the magnifying lens of the public performance.
Sadly, British ballot papers lack the option of “None of the Above”.
My MP also happens to be my PM and as I have already made clear what I think of him, I hope the Monster Raving Loony Party or one of its colourful successors has the decency to field a candidate for whom I can cast my ballot. As is, in the constituency in which I live they don’t count the Tory vote, they weigh it, so my protest vote, for whom ever it might be, will barely give David “call me Dave” Cameron a sleepless night. It will, however, to be sure, make me feel a hell of a lot better about myself and about my democratic rights and duties. Pardon the diatribe.
On GDP, investment and flying pigs
I was going to comment on the release of the UK’s Advanced Q1 GDP yesterday which, at +0.3%, missed both consensus and below consensus forecasts. On the back of the weak quarterly, the annualised GDP figure dropped from +3.0% in 2014 Q4 through the forecast of +2.6% to only +2.4%. Sceptics will argue that this first cut has too little data to be meaningful and that it will surely be subjected to considerable revision before the final number is reached, but as it was released just over a week before the election, it is not entirely irrelevant.
Maybe it’s nothing more than activity and investment decisions being held back by the uncertainty with respect to the outcome of or the impending elections with their five-month campaign which will be followed by a massive rebound once the outcome is clear. Investment in the training of flying pigs maybe?
The Tories, unsurprisingly, have used the soft number to warn how fragile the economy is and how this is not a time to experiment with a shift in policy towards the left. Labour, equally unsurprisingly, are trying to use it to prove that recent growth was just a flash in the pan and that Ed balls’ Plan B would have worked much, much better. A curse on both your houses!
What it really does show is that that the British economy is better positioned than that of its European partners but that, with zero to next to no growth out there, the UK cannot consistently expand solely on the back of a re-leveraged domestic consumer either. The current coalition has done well to fire up the economic starter motor but with the mainland fuel pipes blocked, the main engine will not run properly. All the electoral promises in the world cannot change that and without the stream of tax receipts which will be required for any of the pie-in-the-sky dreams of either side to be financed by, the British citizen is in for shock and disappointment, irrespective of who wins.
The markets didn’t really care and on what was overall quite a volatile day, it’s hard to tell whether gilts went up or down on the news. Global price action was once again more relevant as it, not least of all, was subjected to the rumour of a US ship being seized by Iran in the Straits of Hormuz with its concomitant interim effect on the price of oil. All proved to be a storm in a teacup and we go into today waiting for the outcome of the FOMC meeting which we know, in our heart of hearts, will add nothing or next to nothing to our understanding or lack thereof of what happens next.
Best to continue to trade the momentum, to buy what’s going up, to sell what’s going down and if it’s going nowhere, to go for a long lunch.
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PS: My annual charity appeal got off yesterday to a cracking start. Thanks to early donors and even greater thanks to those who are saving up to make their even bigger donation today to :
https://crowdfunding.justgiving.com/domweniprimaryschoolghana
