A clear majority
Boris Johnson has won one of the most decisive election victories in recent political history. By giving the Conservatives a majority of 78, the largest since 1987, the Conservatives have broken the deadlock that had taken over British politics since the 2017 election.
The pound has reacted strongly to the new-found certainty that business and the economy have not had for years. Pundits are focusing on the certainty this result will mean for Brexit. The result also gives business a new certainty. It will not need to adapt to the whims of a Marxist government with little regard for private property and which might bankrupt the country.
Get Brexit done
Now we can be sure that the UK will leave the EU on the 31 of January (though some are still arguing against it). But the road to leaving the EU is far from smooth. Boris’s majority means he’ll be able to enforce his version of Brexit. But it also means he does not necessarily need the support of the European Research Group (ERG) any longer. A softer Brexit may be the result. Watch for what happens to Jacob Rees-Mogg, the ERG’s former chair, in the coming days as an indicator for what Boris is thinking.
Over the coming months, the hard work might just be starting. As negotiations with the EU get underway, expect former Remainers to push for what they will call a “level playing field” (or harmonising with EU regs at the expense of global trade). Leavers will take a more global picture, arguing for open markets and global trade.
A new form of Conservativism
Boris’ triumph will also realign British politics. This that may have an even bigger impact on politics going forward. The Tories have won a whole range of working-class seats in the North and Midlands. At the same time, they lost seats in the South East. Given that the first rule of politics is that you must “dance with the one that brung you”, the Conservatives must now deliver for these regions. Boris will set out to earn the votes that he was lent this time.
The impact on business
So, expect a Tory party that is prepared to intervene in the market. Expect an increase to the minimum wage. Expect a freeze on entrepreneur’s relief and for corporation tax to remain the same. Perhaps more significantly, expect a huge boost in infrastructure spending in the North and Midlands. Boris has “never seen a bridge he doesn’t like”. The Treasury will rip up the fiscal rulebook to fund projects outside of London and the South East.
The pound surges
The pound staged its biggest rally in almost three years and shares surged after Boris’ victory. This is a sign of a return to certainty and stability. Sterling jumped more than 3 cents against the US dollar to $1.35, marking its highest level since May 2018 and its biggest rise since 2017. The pound also rallied strongly against the euro to €1.20, hitting a high not seen since shortly after the EU referendum.
A bad night for Labour
Labour had its worst election result since 1935. Most Labour MPs have blamed a mixture of the dislike for Corbyn, and what he stands for, on the door step and the party’s equivocation on Brexit. The party will now need to consider whether Corbynism and its hard-left agenda are worth pursuing or whether they need to get back to being a party of the centre-left.
Expect a battle, and an unedifying one. There will be those who believe the Corbyn project just needs “one more big push”. Former Blair-and-Brownites will insist different lessons should be learned, and will push for a return to the centre ground. The first question will be whether the reformers can reclaim any of the levers of power within the party machinery which have been seized by the left.
Corbyn or bust
Corbyn has suggested he’ll stay on as leader temporarily. With John McDonnell, he might try and anoint the next leader from within his faction. Potential Corbynite successors include Rebecca Long-Bailey, former shadow business secretary, and Angela Rayner, former shadow education secretary.
A new hope for the moderates
However, Labour moderates will want to take back control of their party. Expect Keir Starmer, former shadow Brexit secretary, Emily Thornberry, former shadow foreign secretary, and backbench MP Yvette Cooper to be busy gathering people to their cause over the next few days. If the leadership election happens quickly, expect the moderates to do well.
The United Kingdom of Great Britain and Northern Ireland
At an extreme, it is arguable that we will see a United Ireland before we see a divided Great Britain. For the first time in Northern Ireland, republican MPs have outnumbered Unionists. To a degree this may be a reaction against the DUP shenanigans with Theresa May, but it may mean more.
In Scotland, having campaigned against Brexit, the victorious Scottish National Party are now arguing that they stood for a second in a generation independence referendum. Expect the government to reject IndyRef2 until after Scotland has held its own elections, with the issue more front and central, next year.