Fears of a hung parliament make sterling fall
Dominic Gates
Following a recent YouGov poll for the Sunday
Times, fear is rife that there could be a hung parliament after the General Election. The gap between the main parties is thought to have narrowed by 2%.
This idea of a hung parliament has spread like wildfire over the last few days, receiving coverage in the national and local press and within a wide variety of social media.
It has been reported that the pound fell to a 10-month low as fears have grown about a hung parliament and the potential lack of effective decision-making powers in a forthcoming government.
On Monday (1 March), sterling fell three cents against the dollar, and today the pound has recovered to just over a cent down on the dollar. Monday’s fall put the pound below $1.50 for the first time in a year and also left it significantly weakened against the euro.
In the City fear is growing that a weak government could gain power “unable to cut spending and balance the budget”[1]. However the fear extends much further than this. What if the pound falls further? How long will recovery take then? Speculation is abundant.
If there is one thing that can be taken from this, it is that organisations such as the Industry and Parliament Trust will prove ever vital in this time of transition for government. It is empirical that business and Parliament continue to improve their relations so that whatever the outcome of the General Election, mutual understanding and communication between the money-makers and the law-makers continues to improve so the sterling stays strong, and confidence remains with the UK economy.
[1] 'Eyes on the City after pound tumbles amid fears of a hung parliament', Daily Telegraph, 02-03-10.
