GE2017: A hung parliament and the future of the UK economy

A shocking General Election result with the highest youth turnout in recent history appears to have thrown the Tory party into panic. But how will a hung parliament and the ensuing drama affect the rest of us – and especially our housing?

The young British voting public could be forgiven for becoming numb to the world of false promises, ill-advised policies and party infighting in recent years. From Brown, to Cameron and May, the country has failed to encourage youth interest in politics since the early days of Blair, and with increasing tuition costs, low wages, and a bleak future on the cards – some might say it’s easy to see why.

Many of the related issues have implications for our economy; and therefore those keen to sell homes this summer; especially to younger buyers.

So, let’s take a closer look at the background of each one, before summing up those implications…

Corbyn: Out of the shadows

When Jeremy Corbyn vocalised his intention to stand for the Labour leadership after the catastrophe that was Ed Miliband’s tenure, his opinions were at odds with the majority of ‘old’ labour backbenchers, who felt his policies lay too close to socialism and even Marxism.

However, his opposition to the Welfare Reform and Work Bill in 2015 and his intention to provide a ‘left-wing’ voice within Labour clearly resonated with the party members, ultimately leading to a landslide victory with 59.5% of the leadership vote – much to the ire of traditionalists.

With his radical ideals, an uprising against his leadership came from within his own shadow cabinet, led by Hilary Benn who subsequently lost his position within the party as a result. This revolt, along with newly released public polls that showed a negative view of Corbyn as a leader, looked to be the end of his career as a second leadership challenge was issued in September 2016.

Despite the negative press coverage, he continued to persevere, and when the results came in, Corbyn actually managed to increase his support within Labour to 61.8%. This shocked many political commentators, but cemented him as the de facto choice for leader.

May: Over-confident

When Tory leader Theresa May called for a snap election in April, despite already possessing a majority until the next general election in 2020, she aimed to increase her majority to as many as 419 seats thanks to public opinion polls which showed a 20-point lead.

At the time, it was unfathomable that the Tories could lose seats by time the snap election took place – but thanks to a combination of a manifesto lacking greatly in detail, several U-turns on unpopular policies, a failure to engage in televised debates with the opposition and a general lack of personality, the tide began to turn.

With only two weeks to go before the election, the 20-point lead had been slashed to 6, as for the first time in almost two decades, the youth appeared to be taking a greater interest in future of the political landscape. Attendance numbers for Corbyn’s rallies outnumbered those of Theresa May by a staggering amount, and for the first time, the media began to get behind the possibility that the labour leader could pull off the comeback of the century.

Judgement day

There was a great amount of controversy on social media on the day of the election as Twitter and Facebook became awash with young voters being told they could not vote due to registration issues, and with an already expected low youth turnout, many polls still saw a Tory landslide majority as a likely result.

It wasn’t until the polling stations closed at 22:00 on 8 June and the exit polls were released that it really hit home for the Tories just how successful the opposition leader’s campaign had been – and just how inefficient their leader had been in inspiring the voting public, with a hung parliament becoming a solid prediction.

Rumours began to circulate that upon hearing the polls, Rupert Murdoch, founder of News Corporation and owner of The Sun newspaper stormed out of the The Times post-election party in disgust, after his anti-Corbyn strategy had clearly failed to turn the public against Labour.

Furthermore, it appeared that the public were more interested in the future of the country than previously imagined, with the highest turnout since the 1997 election with over 46 million registrations. The greatest shock was still to be revealed, however.

The resurgence of youth

Once voting was concluded, it was discovered that 72% of 18-24 year olds took the time to vote – a huge rise from the average of 40% between 2001 and 2015. For many young voters, this was clearly a sign that they have had enough of MPs who were far-removed from the everyday plights of those looking to gain a strong start in life.

By time all votes were officially counted, figures showed that the Tories had failed to secure a majority and lost 12 seats, while Labour had secured a further 29 – placing Theresa May’s hopes for a hard Brexit, and indeed her continuation as Tory leader, in jeopardy.

So how did Labour manage to fight back against such a strong Tory majority? For many young people, it was a reaction to the continued austerity measures with regards to the NHS, university education and housing. If the aim was to cause instability within the houses of parliament, then that objective was achieved ten-fold.

What does this mean for the UK economy?

In the short-term, the instability caused by the election upset could be stark. The pound dropped by almost 2% against the dollar upon the release of the exit polls, and has so far failed to recover. For the economy, this is bad news, and many of those who were considering buying a new home  will be more likely to hold off until the future becomes clearer – bad news for those who wish to sell their house fast.

The question for most UK residents is whether or not a coalition government will be formed between the Tories and DUP, or between Labour, the Lib Dems, and SNP in order to take control of the house. If no majority is formed, then there is a chance that a minority government could occur – possibly leading to a second general election in September. Either way, with the already weakened economy, and the supposed start of talks between the EU and UK regarding Article 50 due to take place later this month, there is more than a hint of volatility in the political landscape right now.

What about housing?

In terms of solving the housing crisis, there is no clear way forward at the moment. May’s policies regarding social housing were terribly received, thanks to the admission of no additional funds being allocated for their construction – while Labour’s intentions with regard to social housing are yet to be tested.

Until a majority government is formed, it is unlikely that any steps will be taken towards fixing the shortage of homes for the growing population. Additionally, the lack of new homes will undoubtedly drive up the prices of property across the nation, preventing first-time buyers from raising the necessary funds to put down a deposit.

It is also important to mention how the planned Brexit process has been placed in doubt. Due to the triggering of Article 50, the UK now has less than two years to negotiate a withdrawal from the EU – but with no majority government, and a hard Brexit now off the cards, there is more reason for the UK public to be cautious about their finances and future choices until the matter has been resolved, possibly causing the economy to grind to a complete standstill.

In short, this period of uncertainty is set to continue until at least the final quarter of 2017, as we wait to hear about Theresa May’s fate; whether or not Corbyn will continue as leader of Labour; whether or not Brexit could at this point even go ahead; and whether the policies put forward by the parties would even be workable.

It is, perhaps, little wonder why many analysts are calling this election this biggest shock in recent political history.

Need to sell but worried about finding buyers after the election? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.