As the political circus kicks off in the UK ahead of the election in May, I just want to give those not from these shores a little insight in what to expect.
While I’m looking for the UK economy to pick up in the early part of the year the word “uncertainty” will be a very big feature in that. Mike’s already highlighted that the markets don’t like uncertainty and neither does business and the consumer.
Anytime we get crap data the word will be used in the first couple of paragraphs of every story on every news wire. It will become the excuse that firms, consumers, the dog down the road, are worried about the uncertainty of the election. It could well become a self fulfilling prophecy that uncertainty will drive down economic activity.
There will be a great trade on the elections (probably to fade any negativity) but it’s too early to start getting into that now, with so much else going on. Taking a wide view, the most positive market result will be maintaining the status quo, at the least, and the most negative will be Labour winning and or UKIP coming second or doing really well in the elections. That’s not my political view but a market view.
Most importantly it could have an effect on how the market reacts to data. Blaming the election may take some of the sting out of bad data. Lot’s will happen but this is just a heads up to how things may pan out.
Here’s a few election posts we’ve had recently