The financial markets will respond badly to any minority Labour government which, according to veteran political commentator and TV presenter Andrew Neil, is the most likely outcome after next Thursday’s general election.
Speaking at the Food and Drink Federation’s (FDF’s) Manufacturer’s dinner last night in London Neil, who presents the This Week and Sunday Politics programmes on BBC1, said Britain was entering “unchartered waters”.
“We are back in the land of minority government, and I say minority government rather than another coalition government,” said Neil. “But whether it is Mr Miliband or Mr Cameron it is going to be inherently unstable … and that will have financial and economic consequences.”
“If it starts to get [politically] messy, the markets could start to take notice. And it will make it messy at a time when there is still a fair amount of deficit reduction to be done.”
Should any financial or political crisis occur globally, he added: “An unstable British government which has still not done all the heavy lifting that needs to have been done on deficit reduction will be particularly vulnerable.”
In the TV debate later last night on BBC1 Labour leader Ed Miliband categorically ruled out doing any deal with the Scottish National Party (SNP), which some commentators suggested would limit his options post May 7. The SNP is vehemently against austerity measures that would be necessary to enable the UK’s deficit to be reduced quickly.
Neil remarked that with “poll of polls” showing Conservatives and Labour stubbornly static with around 34% of the vote, a new political world in which the SNP is expected to make big gains north of the border and the way votes are distributed around the rest of the country, a minority Labour government the most likely outcome of the election.
“Something has changed in this election and it is a change of huge significance and it will have an enormous impact on the result and that is best summed up in one word – Scotland,” said Neil. “Scotland is changing the whole nature of this UK election.”
He noted that David Cameron’s Conservatives could not form a government with only 35% of the vote, but Labour previously could because its vote was spread out across the country compared to the Tories, which is “increasingly concentrated in the south and south east”. But that was assuming Scotland would “loyally send 40 or 41 Labour MPs to Westminster”. “That is now not going to happen,” he added.
“If either of them [Labour or Conservatives] get 34 or 35 they are in minority government territory,” said Neil. “If we vote on Thursday May 7 the way the poll of polls is at the moment then I think it will be Mr Miliband that will be attempting to form a minority government.
“If on the other hand there is a last minute or final day swing to the Conservatives of two, three or four points, which is what the Conservatives think is going to happen, then it will be Mr Cameron that will be forming the government, but it will still be a minority Conservative government that he will be trying to form.”
Introducing Neil, the FDF’s new director general Ian Wright said the sector could expect to see big changes at the FDF under his leadership over the next six months, although he didn’t go into details. “This industry deserves a great advocate and a great representative and we intend to become it,” he said.