Will a hung parliament really be economic disaster?
The press is full of scare stories about how a hung parliament will cost us dear. The Telegraph in its normal, balanced fashion told us a hung parliament will cost households £5,000, because the result of a three-way vote will be markets taking fright, forcing interest rates up.
If that is so, then explain how it is that since the debate the week before last, which saw the Liberal Democrats surge in the opinion polls, the pound has actually gained, albeit only by a tiny amount, against the dollar and the euro. The yield on government bonds has fallen. True, government bonds have risen over the last six months, but as Capital Economics points out, this rise seems to be consistent with the improving economic outlook and rising purchasing managers indices.
The truth is, the divisions between the three main political parties are actually quite small. But all parties are afraid to own up to the full extent of the fiscal crisis, and of the pension crisis in the making. Prime Minister’s Question Time is great entertainment, but then again, no doubt so is watching Gordon Brown’s kids squabble at bath time. What the UK really needs is for its leading politicians to own up to the country’s big problems, and that will only happen if they learn how to work closer together.
© Investment & Business News 2013