In the first few days since the UK election result, a certain amount of delirium seems to have taken over the Westminster bubble.
While the result has left Prime Minister Theresa May’s pledge of a “strong and stable” government in tatters, the lady herself seems to be trying hard to pretend the event never happened, forging on in the hope that if she continues to talk about ‘stability’, everyone might just forget her failure to achieve a majority and simply let her carry on with her job.
However, she is in reality no doubt seriously weakened, and this could yet prove to be good news for infrastructure investors. For while nobody likes uncertainty, the situation means May has been extremely constrained in her ability to swing the axe at ministerial level, leaving all her main ministers in post.
In particular, the good news for the time being is that Philip Hammond remains in Treasury. It is understood that he was not averse to the planned development of a PF2 programme and won’t need to be brought up to speed on the initiative. Whether he will have the political room to manoeuvre this – or indeed whether it is a priority for this minority government – remains to be seen.
Delirium also seems to be taking its toll on the Labour party at present. Jeremy Corbyn immediately called on May to resign, suggesting that he is “ready to serve”. But while Corbyn’s success confounded both the pollsters and the critics, it seems the man himself has forgotten that his party still fell over 50 seats short of the Conservatives’ total. Hardly a mandate for government.
So clearly there are some positives for the business world to take from this election result – many had thought a surprise success for Corbyn would have a terrible effect on the economy, while others had feared the exit of Hammond from the Treasury would be a significant loss.
However, it is impossible to gloss over this result and assume that things can carry on as normal (even if that seems to be what May is desperately trying to do).
Even with the apparent deal between the Conservatives and Democratic Unionist Party giving May the number she needs to govern, there is no getting away from the fact that she will need every vote to get almost any policy through.
On the one hand, infrastructure could benefit here: as something that can often transcend political in-fighting, there may be opportunities for projects to get the go-ahead as the government looks to areas of consensus to show it is still able to get things done.
On the other, however, Corbyn and his team are vehemently opposed to private finance in public services, so it will be almost impossible for Hammond or other ministers to sneak through projects without howls of protest from a resurgent Labour party.
Tough and uncertain times lie ahead. Indeed, the premise of this blog – that May will lead for the foreseeable future – could yet be undermined, with some critics saying that the prime minister could be forced out before the end of the summer (or even this week, according to George Osborne, who seems desperate for the woman who unceremoniously kicked him out of Treasury to get her comeuppance).
The more likely scenario seems to be that May will be forced out after a period of her much-vaunted ‘stability’, which might come as a relief to the markets – but the prospect of fresh elections are now a constant reality. Whether it be a new leader seeking a mandate, or a failure to get key legislation passed due to a lack of numbers, the chances of the current arrangement running for a full term and proving as stable as the 2010 coalition seem virtually nil.