9 Jun 2017
Phoebe Rountree sets out the various possible implications and questions raised by last night's unexpected election result.
CON 316 (-12)
LAB 261 (+29)
SNP 35 (-21)
LD 12 (+4)
DUP 10 (+2)
OTH 13 (-2)
After 647 of 650 seats
Uncertainty. Investors hate uncertainty. It has been the chorus of the real estate industry time and again over the past few years, when faced by policy upheavals from SDLT increases to Brexit. And yet once again after last night's shock election result, ongoing uncertainty is the only thing we are sure of.
For those who went to bed at 10pm following the exit poll that indicated a hung Parliament, there remained what felt like a fairly reasonable belief that the Conservative vote had once again been underestimated and the party would be returned to power (albeit with damaged credibility) in time for Brexit negotiations on 19 June. However, by 2am it felt abundantly clear that no party would achieve a majority. As the night went on a slew of highly regarded Ministers lost their seats, including:
In the end, as Theresa May's appeal to the Labour heartlands fell flat, it was her party's impressive campaign in Scotland that gave the party something to smile about. Much will be said about the potential demise of IndyRef2 given the end of the SNP's Scottish reign, with at least 20 SNP constituencies – including those of Deputy SNP Leader Angus Robertson and former SNP Leader Alex Salmond – splintering off to the Conservatives, Labour and Lib Dems.
It's important to note that one factor behind Labour's unexpected increase in seat-share was the enormously inflated turnout among younger voters. After decades of low turnout in this demographic, this sea change represents just a new facet in the rapidly changing global political status quo. Just as the isolationism represented by the Brexit vote found its way to America in the 2016 election for President Trump, the energisation of the youth vote when presented with the unabashedly left-wing Bernie Sanders has crossed the Atlantic for Jeremy Corbyn. Patterns such as these are being repeated across western democracies and are re-shaping the political and policy context in which industries operate, in ways for which we have no precedent, and cannot easily prepare.
Aside from these implications, the primary focus as people unpick the result will inevitably be on Brexit; about the enormous failed gamble of Theresa May, whether she will be the person negotiating Brexit and, if so, whether she has the credibility to do so effectively. Her entire rationale for sending an election-weary country to the polls for the third time in three years was a bid to strengthen her hand in Brexit negotiations by way of a larger parliamentary majority. There are those who will argue that, reputationally, she has much ground to recover if she is to negotiate 'a good deal'.
This election result presents us with huge questions that we cannot yet answer. Has the mandate of the next government to push for a 'hard Brexit' been irreparably weakened by an election result that looks like a rejection of that avenue? Can a formal or informal coalition government see a five-year term through, or will another general election soon blow a hole in the Brexit negotiations? Will a race for the Conservative Party leadership be called before we can even get that far?
We will continue to keep our members and the real estate industry updated as the answers to these questions become clearer. Right now, we must assess the good and the bad for the industry with the information that we do have. We can take heart that, currently, the chances of IndyRef2 seem to recede further into the distance with every hour. And although the loss of Gavin Barwell as Housing Minister is a frustrating disappointment given the excellent work he has put in over the past year to understand our industry, we cannot know until we see his replacement whether or not the value of this hard work will be lost.
If we can be certain of anything at the moment, it is that in a time of potentially prolonged uncertainty, our relationships with Metro Mayors, local authorities and other stakeholder bodies will be of inestimable value to ensure that the UK remains open for business, and that real estate continues to key a central driver of growth and productivity.