AXA IM: Commentary by David Page on UK elections
David Page, Senior Economist at AXA IM, has commented on the UK General Election results. Below is a summary of his key points:
- The Conservative Party under Boris Johnson has won the UK General Election with an estimated majority of 80. It is the party’s biggest majority since 1987. The Tories look to have secured a total of 365 seats (317 in 2017), with Labour on 203 (262), the Liberal Democrats on 11 (12) and the Scottish National Party on 48 (35).
- A more Brexit-aligned Tory party with a large working majority should be able to pass the Withdrawal Bill to allow the UK to leave the EU on 31 January 2020.
- The manifesto pledge to “not extend” the transition period means the risk of a de facto no-deal exit at the end of 2020 will persist, continuing to weigh on investment.
- Fiscal easing should provide a lift to the economy despite ongoing Brexit uncertainty. However, the Tories have been unclear on how much easing they would undertake.
- Despite that uncertainty, we expect the UK economy to accelerate next year. We forecast growth of 1.2% in 2020, with sterling rising modestly as Brexit risks reduce.