The Brexit election: another fine mess

​Seldom has the political cliché that ‘a week is a long time in politics’ been so true, as this discussion between FT editor Lionel Barber and political commentator Janan Ganesh explains.
Paul Lewis
Jun 13, 2017

Last week, an all-powerful British Prime Minister was scheduled to meet the new French presidentwho some felt would struggle to muster his own parliamentary majority. Today, the opposite, and more, prevails. This reversal of fortunes underscores important lessons not just for politicians, but risk managers and senior corporate decision makers trying to make sense of events.

First, received opinion, whether from polls or pundits, is still just opinion. As the respected US psephologist Nate Silver points out in his First Rule of Polling Errors: ‘polls almost always miss in the opposite direction of what pundits expect’. For business leaders, it’s sometimes wise to take the political temperature oneself. Although admittedly unscientific, simply talking to voters or customers without prejudice, and asking what they and their friends are thinking and feeling might just reveal something your market research is missing.

Second, look for deeper causes. Theresa May’s campaign was undoubtedly awful. But does that alone explain the outcome? With 42.4% support, it was one of the Conservatives party’s highest ever vote tallies. Perhaps it could have edged up a couple more percentage points, but the more significant factor was a 10 percentage-point surge to 40% for the opposition Labour party led by a largely unreconstructed socialist Jeremy Corbyn. For many, especially voters under 45 years old, the ideological wars of the 1980s are ancient history. The winning idea of that era, free-market meritocracy, like all ideologies, eventually loses some of its intellectual vigour. Its benefits are taken for granted; its failings—a global financial crisis, corporate corruption, stagnating household incomes and soaring executive pay—are ongoing sores. The anti-market backlash may have further to go.

Third, the investment future seems as unpredictable as ever. A united Labour party has the political momentum (in all senses) and would relish another contest with a weak divided government that is about to embark on its quixotic Brexit journey. A Corbyn-led government arguably represents a bigger threat to business than even a botched Brexit. Though the worst may yet be to come, political fortunes can also reverse in surprising ways. The UK election has been interpreted (albeit on shaky evidence) as a call for a soft Brexit. The election fallout could change the dynamic in negotiations with the EU where some leaders welcome a relatively straightforward departure as an opportunity to get on with ever closer-union for an inner core. The added threat of a hard left Britain emerging from the chaos might even focus minds on minimising the disruption.

Paul Lewis

Editorial Director at Headspring