Sterling and the London stock market were buoyant this morning despite continuing deadlock over Brexit.
Chronic uncertainty over whether Britain will take part in elections to the European Parliament on 23 May, coupled with a looming wipe-out for the ruling Conservative Party in local elections on 2 May, would normally be expected to cast a cloud over UK financial assets.
But at the start of the first full week of trading in London after Easter week, currency and equity markets had a spring in their step.
Mixed picture on continent
The blue-chip FTSE 100 index was 0.08% higher in early trading at 7,434.37, while the FTSE 250 – which has a more domestic focus than the international FTSE – was 0.31% higher at 19,918.22.
This sunny picture in the City of London was in marked contrast to happenings in Westminster. MPs seem no closer to approving a withdrawal deal, making the prospect that Britain will be asked to elect members of the European Parliament, as it will still be an EU member, more likely.
These elections can be cancelled if a withdrawal deal is approved before 22 May, but there is – as yet – no sign of a swing change.
Opinion polls suggest the mainstream parties have much to fear from public fury if the vote goes ahead. The Conservatives, who pledged to deliver Brexit in the wake of the June 2016 referendum result, are vulnerable to a new movement, the Brexit Party, headed by veteran independence campaigner Nigel Farage.
In those Tory seats that voted to remain, the party may also lose votes to another new party, Change UK, which wants to reverse the 2016 result.
Pressure on Theresa May
The main opposition Labour Party meets tomorrow to decide what will be in its European election manifesto. There is growing pressure on the party leadership to promise a second referendum, although party leader Jeremy Corbyn is understood to be opposed to this.
Among smaller parties, the Liberal Democrats and the Green Party are in favour of a second vote while Mr Farage’s old party, the UK Independence Party, is not.
Meanwhile the Conservatives have no immediate plans to launch their own election campaign. Party chairman Brandon Lewis told the BBC he was still focused on getting an agreement, so that the elections would not need to be fought.
The Conservatives are braced for losses in the local elections, which may further increase pressure on Theresa May, the Prime Minister, to stand down.
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