London share prices have been relatively unscathed by the governing Conservative Party’s disastrous performance in the European Parliament elections, but sterling has taken a beating on foreign exchange markets.
Trading in London resumed this morning after yesterday’s Spring Bank Holiday, the first opportunity for markets to give their verdict on the Tory Party’s performance at the ballot box.
Although the votes were cast on Thursday 23 May, the results were kept under wraps until Sunday; the day which many European countries hold their elections.
A new record low
The Conservative Party plunged to just a 9% share of the vote, while the Brexit Party, which has only been in existence for a few months, took 32% of the vote.
Party leader Nigel Farage is now demanding a role in the negotiations to take Britain out of the European Union. Meanwhile, the Conservatives are embroiled in a leadership contest to find out who will replace Theresa May, the Prime Minister, who is standing down.
European Parliament elections usually take place in an “off” year in British politics, when there is no national contest. Governments do not tend to perform well as the electorate take the opportunity to punish them without displacing the national administration. For instance, the Tories took a beating in 1989 and Labour was hammered 20 years later, falling to 15% of the vote.
Until last weekend that was a record low, which has now been surpassed by the current Tory government.
While stock markets were lower this morning in Frankfurt, Paris, Amsterdam and Madrid, London’s blue-chip FTSE 100 Index was up 0.8% at 7,283.58. The FTSE 250 Index, which is more reflective of the domestic UK economy than the international FTSE 100, was 0.09% higher at 19,145.01.
Against the dollar, it lost 0.14%, valued at $1.2662.
Boris is the bookies’ favourite
Across Europe as a whole, the results show losses for the two main groups that have dominated the Parliament’s politics since the inception of the European Parliament: the Christian Democrats and Social Democrats. While they remain the largest groups, they have lost the majority in the parliament that they have traditionally enjoyed.
Liberal and Green parties have made gains, as have nationalist and populist groups.
With the European Parliament elections out of the way, attention is now focused on the race to succeed Mrs May. The bookies’ favourite is the former Foreign Secretary and London Mayor Boris Johnson. Where anyone seeking to bet on his victory will need to put down £11 for every £10 they stand to gain.
Former Brexit Secretary Dominic Raab has 5/1 odds, while the current Foreign Secretary Jeremy Hunt attracts odds of 12/1.
Considerably longer odds are offered on former Work and Pensions Secretary Esther McVey (66/1) and former Leader of the House of Commons Andrea Leadsome (20/1).
Meanwhile, Britain’s newly elected Members of the European Parliament are preparing to head for Brussels. It is not known how long they will serve in the parliament, given that Britain is due to leave the EU later this year.
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