Conor Coyle Sharecast | 25 May, 2017 16:03 - Updated: 17:49 | | |
All the latest news and economic analysis as the UK votes in the general election. Prime Minister Theresa May called the election in April in order to secure a stronger mandate for implementing the government's plans for Brexit, and while a landslide Tory victory looked on the cards early on, Jeremy Corbyn and Labour have narrowed the gap in the polls.
Our coverage of the first 2017 General Election is now over.
Here's a selection of our favourite social media chatter on a historic day for the UK:
Farmers, lock up your wheat fields, because someone is going on the rampage today #hungparliament— Neil Benson (@OrangePeel72) June 9, 2017
It's hilarious that Arlene Foster, whose government in Northern Ireland collapsed over a scandal to do with heating churches, is kingmaker.— Ned Donovan (@Ned_Donovan) June 9, 2017
It's odd that Paul Nuttall has resigned, as according to his CV, he won the seat, and in fact, the election.— David Baddiel (@Baddiel) June 9, 2017
London Capital Group analyst Jasper Lawler says that today's shock result leaves two very distinct possibilities in the UK government's approach to Brexit negotiations:
"Theresa May hasn’t achieved her goal of a bigger mandate for Brexit and that creates uncertainty.
"We see two near opposite scenarios for Brexit as a result of the election. That goes some way to explain the relatively muted reaction in Sterling compared to the day after the referendum. May can soften her Brexit approach in hopes of opposition party support or harden the approach in order to ensure support from EU sceptics within her own party. For one, we think the chance of a parliamentary vote at the end of the negotiations overturning a Brexit deal has increased substantially.
"One of the more fervent Leave supporters in the EU referendum, Brexit minister David Davis suggested in the early hours on Friday that the government’s position on membership of the single market should be reconsidered. To us, aggressive posturing from Europe would suggest a ‘Soft Brexit’ whereby concessions on immigration can be met with concessions on the single market is basically impossible whichever UK political party is involved.
Thursday's UK general election saw a record number of black and minority ethnic candidates elected as members of parliament, with 10 new BME politicians being elected to the House of Commons.
According to political campaigning organisation Operation Black Vote, the increase in BME MPs is an important sign of how multiculturalism in Britain is working.
The number of MPs from BME backgrounds now stands at 51, after victories in areas such as Battersea, Birmingham and Peterborough.
In addition, there is also now a record number of women in parliament. There are now 207 women in the Commons, up from 197 after 10 new female MPs were elected on Thursday.
A "global record" was also claimed for the number of 45 'out' lesbian, gay, bisexual, trans and queer (LGBTQ) MPs elected to Parliament, according to Professor Andrew Reynolds, noting that 19 were in the Labour party, 19 Tories and 7 SNP.
UK bookmakers have shortened odds on there being another general election before the end of 2017, with Paddy Power going as low as 7/4.
Thursday's shock election result which saw the Tories lose their majority in the House of Commons, with Theresa May's gamble of calling a snap election not appearing like a good call at this stage.
Boris Johnson has been backed into 2/1 to succeed May as PM.
Paddy Power spokesperson said: "Nine days into June, and this really does feel like the end of May.
“But, whatever the result over the coming hours, don’t get too comfortable – it’s a short price for another election to be called in the next six months.
“One thing that is for sure is, if Jeremy Corbyn’s the next PM, we’re going to need to borrow his magic money tree to pay out on the bets on him."
Theresa May has spoken in front of 10 Downing Street following a brief conversation with the Queen, pledging to provide certainty despite a damaging election in which the Conservatives lost their parliamentary majority.
The PM said that the result of the election provides 'legitimacy' for the Tories and the DUP to proceed to form a government ahead of Brexit negotiations.
"What the country needs now more than ever is certainty," May said. "Having secured the largest number of votes and greatest number of seats in the general election, it is clear the Conservatives and Unionist party has the legitimacy to provide that."
May said the two parties had had a "strong relationship" that would be beneficial for Britain.
"Our two parties have enjoyed a strong relationship over many years, and this gives me the confidence to believe that we will be able to work together in the interests of the whole United Kingdom."
"This will allow us to come together as a country and channel our energies towards a successful Brexit deal that works for everyone in this country – securing a new partnership with the EU which guarantees our long term prosperity. That’s what people voted for last June.That’s what we will deliver. Now let’s get to work."
Theresa May is en route to the Palace in order to inform the Queen about forming a government, which is widely reported to include the 10 MPs from the DUP.
Theresa May was returned as MP for the Maidenhead constituency during the night, but faced an interesting challenge from one 'Lord Buckethead'.
While May lined up alongside the candidates from the other major parties, Buckethead was recorded performing a 'dab' during the announcement of the results.
Buckethead received 249 votes in the constituency, but still appeared to be enjoying himself a little more than the PM.
Chris Beauchamp, Chief Market Analyst at IG, says that a period of calm has been established in markets following this morning's election result.
"Calm has descended after the somewhat frenetic activity overnight and in the opening minutes of the session. This has been a ‘Brexit in miniature’ morning, with big international stocks sending the FTSE 100 flying thanks to a weaker pound. Some of the gains for the index have been trimmed, as the Prime Minister (which is what Theresa May still is) seems highly likely to strike a deal with the DUP. Oddly enough, should this deal hold, the election might rapidly fade from our minds; indeed, with the Conservatives now having to strike deals, it could be that we are in for a softer Brexit.
"Perhaps we'll end up drifting into some sort of informal associate membership, watching benevolently from
the sidelines. This is the outcome that many in financial markets would love to see."
Theresa May looks set to strike a deal with the Democratic Unionist Party, the biggest party in Northern Ireland. But who are they and what do they stand for?
The DUP were seen for many years as the radical element of the unionist movement during the conflict in NI and throughout the peace process, overtaking the UUP as the biggest party in the region in the years following the Good Friday Agreement.
The party was founded in the 1970s by one Ian Paisley, a charismatic but controversial reverend, who led the party for decades and through the peace process, finally agreeing to form a government with arch enemy Martin McGuinness and Republican party Sinn Fein.
Currently led by NI First Minister Arlene Foster, the DUP has maintained its core Christian values and right-wing policies in a power-sharing government at Stormont, although there has been gridlock in recent months as the parties could not reach an agreement following an inconclusive Assembly election.
Sinn Fein refused to form part of a government in which Foster was First Minister, after a botched heating scheme in which businesses were given £1.60 for every £1 they spent on heating their properties.
They now perhaps hold the keys to the Tories clinging on to power, and it appears a comfortable match considering the DUP's support for a hard Brexit, but they will certainly demand assurances that there will be no special status given to NI following negotiations with European leaders.
UK Independence Party leader Paul Nuttall has stepped down as leader of the party after a disastrous election in which the party did not win a single seat.
UKIP saw its total number of votes drop from 3,881,099 in the 2015 election to 593,852 on Thursday, as voters saw little reason to back the party once its main priority of an exit from the EU had been achieved.
Nuttall said on Friday that the party continued to have a future despite the poor performance, and promised to be a watchdog as the UK enters Brexit negotiations with uncertainty following the shock election result.
"The prime minister, and I suspect it will be a Tory, must know that if they begin to backtrack or barter things away then they must know they will be punished at the ballot box and that will only happen if UKIP is electorally viable and strong.
"We are in effect the country's insurance policy on Brexit," Nuttall said.
With only one result still undeclared in the general election but the Conservatives short of a parliamentary majority, Theresa May is reported to have no intention of standing down.
No.10 Downing Street confirmed May will visit the Queen at Buckingham Palace at 1230 BST to seek permission to form a government with Northern Ireland's Democratic Unionist Party as kingmakers.
The Tories have held talks to combine their 318 seats with those of Northern Ireland's right-leaning DUP, which won 10 seats.
The single seat remaining is the London constituency of Kensington where the council's vote tellers have been sent home for a rest following two recounts.
Kensington was felt to have been a relatively safe Conservative seat but proved too close to call, with around 36 votes between Tory and Labour.
Sky sources reporting that Theresa May will not resign #GE2017— Anthony Cheung (@AWMCheung) June 9, 2017
May's position as prime minister of the UK is under serious threat, according to Ben Williams, a politics lecturer at the University of Salford.
"Theresa May's gamble in calling this general election appears to have spectacularly backfired, and her position as Prime Minister is now under major threat. This was a notably worse result than in 2015," Williams said.
"Her own party may ask/force her to stand down given the unexpected Conservative parliamentary losses. Despite hoping to strengthen her negotiating stance over Brexit after this election, she now finds herself in weaker position, which has some major political and constitutional issues going forward.
"The overall vote share appears to indicate a return to two-party politics, with the smaller parties being squeezed, but who ironically may now play a crucial role in deciding who governs the country in the uncertain hung Parliament that now ensues.
Economists and strategists at Citibank gave a high probability to the possibility that Theresa May will be forced to resign after her decision to call a snap election backfired with the loss of the Conservative's parliamentary majority.
This would trigger a leadership contest with Brexit negotiations due to start on 19 June, meaning the risks of negotiation delays, a 'soft' Brexit or 'chaotic' Brexit have all risen, Citi said.
"There is going to be a lot of politicking ahead, but we think that, at this stage, impact on financial markets will be relatively limited."
While a Labour-led government would likely have had a significant impact on UK financial markets, especially via a sharply weaker sterling, the actual result is likely to see the pound "modestly weaker", with "modest upside" risk for gilt prices and "modest downside" risk for UK shares following their 40%-plus rise from 2016 lows.
One themes Citi suggested for investors was around the pound.
"We have argued since end-March that it is more important for UK equity investors to focus on theme over macro biases such as GBP tilts. We maintain this view following the election."
Citi also continues to prefer Europe excluding the UK to UK equities.
Just before 0900 BST, the FTSE 100 is up 40 points at 7,490.1, while the 250 is down 170 points at 19,573.76.
With around 70% of its constituents deriving their earnings from overseas, the main FTSE benchmark tends to benefit when sterling weakens. However, its more domestically-focused little sister, the FTSE 250, was down 0.4% to 19,661.96.
With the Conservatives predicted to win 318 seats and Labour 262, Theresa May has fallen short of the 326 seats needed to deliver a majority Conservative government in the 650-seat House of Commons, throwing a major spanner in the works of her Brexit negotiation plans.
As it stands, the Tories could try to assemble a coalition with Northern Ireland's right-leaning Democratic Unionist Party to gain a majority, or govern as a minority and risk having their legislation voted down.
May is due to make a statement at 1000 BST, with some expecting her resignation while others believe she will pledge to form a working coalition.
The increased political uncertainty should lead the market to push back expectations of a first Bank of England interest rate hike to the first half of 2020, according to some analysts.
Market have been pricing the first BoE hike of 25 basis points at around the middle of 2019 but are likely to push this back to the first half of 2020, said Deutsche Bank strategist Jack Di-Lizia, which in line with the richest levels of yields seen in advance of the central bank's May Inflation Report.
"The slope of the money market curve will likely bull flatten in response given the directionality with the outright front end rally, although here the path of the FX will be a key variable," he wrote in a note on Friday morning.
While the Conservatives’ election campaigned was centred upon increasing Theresa May’s majority in order to give her a stronger hand in Brexit talks, Di Lizia felt that in the coming months there is potential for the election result "to lead to a softening in the Brexit stance given the electorate’s rejection of the Conservatives’ policy together with increased push back against increased fiscal tightening".
Although these drivers would see more bearish rates, he felt in the short term at least "the market is likely to focus first on pricing increased political uncertainty as the market digests the formation of the new government together with the potential for new Conservative leadership. This suggests bullish rates price action should dominate initially."
After Theresa May's snap election decision had led to the Conservatives losing seats and a hung parliament in Westminster, HSBC said a wider range of Brexit outcomes was now possible, with a potential coalition government vulnerable to rebellion from hard-line Tory backbenchers, "which could scupper a Brexit deal".
Simon Wells, HSBC's chief European economist, said: "The election offered voters a choice between two very different visions: a high tax and spend economy with the door open to a softer Brexit, or a continuation of fiscal consolidation and the 'hard' Brexit outlined by Theresa May.
"In the end, the country looks to be split right down the middle – with no clear mandate for either vision.
"Its weaker position means the government is more vulnerable to rebellion from its own hard-line backbenchers, which could scupper a Brexit deal.
"Alternatively, the new administration could seek opposition support. Ultimately, this might soften Brexit but it would be a difficult balancing act, and the risk of a mishap, leading to ‘no deal’, is material."
Prime Minister Theresa May has "no intention of resigning" according to the BBC's political editor Laura Kuenssberg, who reported the Conservative leader was looking to try and form a government.
Break - PM has no intention of resigning - working to form a govt based on being largest party in seats and votes— Laura Kuenssberg (@bbclaurak) June 9, 2017
Earlier, Anna Soubry, an anti-Brexit Conservative, said May should “consider her position”.
"Theresa did put her mark on this campaign. She takes responsibility, as she always does and I know she will, for the running of the campaign."
Bookmakers Ladbrokes said Boris Johnson was "well fancied" to replace the PM at 10 Downing Street.
Big prob for May if tries to stay - her mantra was give her more seats cos she doesn't have enough authority - she has a LOT less this morn— Laura Kuenssberg (@bbclaurak) June 9, 2017
MPs will assemble to elect a speaker on Tuesday, says the Hansard Society, with the first proper debate expected to start a week on Monday after the Queen’s Speech. "The incumbent Prime Minister is entitled to ‘meet’ Parliament and test the confidence of the House of Commons to see whether there is sufficient support to enable her to continue in office. The key parliamentary test is the votes on the Queen’s Speech."
With 632 out of 650 seats declared, the Conservatives are predicted to hold 318 seats, down from 330 before the election and 8 short of an outright majority. The latest prediction was for the Tories to win 319, Labour 260, SNP 35 and the Liberal Democrats 14, with Northern Ireland's right-leaning Democratic Unionist Party a potential kingmaker with 10 seats.
Some optimistic left-leaning commentators were also talking about Labour forming a minority government with the SNP, Wales' Plaid Cymru and the Green party.
"Britain’s inconclusive election means it is a question of when, not if, the country heads to the polls again in the near future," says Sam Tombs at Pantheon Macroeconomics.
As the largest party, the Conservatives now have the right to attempt to form a new government, with commentators suggesting a continued alliance with the DUP would give the Tory leader -- whoever it proves to be -- a slender majority.
But Tombs says it is "doubtful such an agreement would last long", given the tendency for government parties to lose seats in by-elections, while the DUP are also likely to have red lines on Brexit that may prove too much for Eurosceptic Tory MPs to stomach.
"Today’s surprise result means it is impossible to predict the outcome of another election," he said. "The Conservatives, however, likely will be forced to back down from the hard Brexit stance that dominated their campaign, while Labour will maintain its soft Brexit position. So, while political uncertainty over the coming months likely will weigh on the pound, we continue to think that a soft Brexit is the most likely outcome, suggesting sterling could appreciate significantly over the medium-term."
The Tories spent the election banging on about a Coalition of Chaos and now they're probably about to let the DUP run the country— Jon Stone (@joncstone) June 9, 2017
Tories will try to form interim govt with pro Brexit DUP. Labour ready to form minority govt with SNP/Plaid/Green— Paul Mason (@paulmasonnews) June 9, 2017
... both Labour and Lib Dems have ruled out a coalition up to now. I expect Theresa May gone in the coming days if not today 2/2— Anthony Cheung (@AWMCheung) June 9, 2017
A South African healthcare provider is plotting a £1.3bn swoop on Spire Healthcare, Britain’s largest chain of private hospitals. Mediclinic International is working with advisers from Morgan Stanley on a possible offer, according to City sources. It already has a 29.9% stake in Spire - the maximum that can be held without making an offer for the other shares - having staged a raid on the stock two years ago. - The Sunday Times
Wall Street continued to climb the proverbial 'wall of worry' as Senate approval of the White House's budget resolution for fiscal year 2018, which many believe paves the way for tax cuts, powered the S&P 500 to a sixth consecutive weekly gain.
President Donald Trump's tax reforms made the dollar the early story, before a sterling narrative took over as Brexit developments filtered through from the EU 27 in Brussels.
US President Donald Trump was accused of fuelling hate crimes after he said the UK crime rate was linked to "radical Islamic terror".
European stocks finished near their worst levels of the day despite optimism regarding prospects for the US economy.
London stocks finished the Friday session almost exactly flat despite encouraging noises emerging from Brussels mingled with optimism stateside over proposed tax reforms.
Despite Cobham share's outperformance over the past six months, Berenberg cautioned clients about the near-term strength of various of the firm's end-markets, alongside operational challenges that would require time to resolve and, for a time, scupper hopes that the dividend would be reinstated.
Octagonal updated the market on its trading on Friday, based on the unaudited interim figures for the six months to 30 September for its wholly-owned subsidiary, Global Investment Strategy UK, saying it was “extremely pleased” with the record revenues and profits achieved.
Support services group Marlowe updated the market on its trading for the six months to 30 September on Friday, saying trading in the first six months of the financial year was in line with board expectations.
Ncondezi Energy announced on Friday that it has agreed - in principle - to the terms of a non-binding offer with China Machinery Engineering Corporation and General Electric South Africa to enter into exclusive negotiations to develop, construct and operate the integrated Ncondezi 300MW coal-fired power project and open pit coal mine in Tete, Mozambique.