With the general election on May 6th creeping ever-closer, the expected result is hazier than ever. Not only has the election developed into a three-horse-race but it looks like it's going to be a photo finish! There has been a lot of speculation recently as to how the result of the general election might impact the financial world, so I am writing this article to give a brief overview of the various different possibilities.
The first possibility is that after all this talk of ?change?, we have none at all. If Labour were to maintain their position as majority party in government I would suspect that there would be very little change in the financial market whatsoever. The Labour tax proposals are broadly similar to those of 5 years ago, with only slight differences in National Insurance and Income Tax that might have any impact at all (but not much?).
If Cameron does finally manage to sneak it then I'm sure there'll be plenty of executives in the city rubbing their hands together. Recently the Conservatives seemed to have shifted back towards their ?good old days? (Thatcher ? good old days?) with more traditionally patriarchal and commerce-led tax proposals. I would suspect that if the Conservatives did win government in this election, there'll be a significant time-lag before they bring in any radically different policies: the financial industry has been in a spot of bother recently with the banking crisis in the spotlight for so long and I doubt Cameron would want to risk fuelling the fire.
The unlikeliest but apparently most popular candidate for this election is Nick Clegg of course: while 6 months ago mentioning his name was often part of a political witticism, Clegg seems to have captured the attention of younger voters and stands a good chance of contesting. Should he come in to power, the Liberal Democrats do, genuinely offer a chance of ?change?. Vince Cable was the first senior politician to speak out against some of the problems in the financial world and the huge government debt that this country has accrued over the last 50 (+) years. More substantial taxes on the city will be necessary to eat into the budget deficit without having to sacrifice public services.
Finally, there is the quite significant chance, of a hung parliament. This, according to every major newspaper in the country, spells disaster for the financial industry. The finance industry needs things done quickly: a hung parliament doesn?t move quickly.
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