The surprising result of the UK election is not really that great an issue relative to the global issues affecting world economic growth, such as ageing populations, debt drag, innovation disruption and protectionism. At the time of writing, there has been a muted response in markets.
Suffering a virtue
We have continued to invest in companies which we think exhibit the ability to “suffer”. By that, I mean the ability to suffer low economic growth, low rates, volatility in asset prices and pricing disruption. We believe these companies continue to serve us in good stead in markets which are near highs and with risk levels remaining elevated. One would assume the UK’s position on Brexit will now soften, but you could also make a case for the expectation that Europe’s stance will harden. We would anticipate that, in the near term at least, we are most likely to have a government which finds itself unable to do much, and we would question how much longer it will be able to continue. This would all seem to point to another election in the not-too-distant future. More meaningful I would say is that this is yet another clear signal that much of the population feels disenfranchised. For the first time in the UK in the adult lives of many of us, we will have a political backdrop in which a genuine socialist mandate exists as a credible choice. Up until now, the Conservative Party and New Labour have been much of a muchness.
All eyes on Italy
Now Jeremy Corbyn offers a genuinely different option, and it would appear many believe this is worth trying. I do feel this election has been much more about this issue than Brexit. It also continues to have implications for future European elections. The focus may turn again to Italy, where once again many feel disenfranchised. The calm over the European political backdrop that Emmanuel Macron’s victory in France appears to have engendered, coupled with the delay in the Italian election, feels as though it could be somewhat misplaced. The trend is still firmly in place that the disenfranchised parts of the population are willing to try a different direction from the mainstream, and Italy’s elections could therefore throw up further surprises.