Notably, although the markets had priced-in the prospects of a Tory majority, the scale of the victory was beyond what had been forecast. Sterling climbed 2.7% against the dollar and is on course for the biggest rise in three years. Put simply, traders are pricing in more certainty about the future path of Brexit and UK politics.
What’s more, early signs show the stock market rallying, with the FTSE 100 opening 0.9% higher, while the midcap FTSE 250, more reflective of UK companies, climbed nearly 5 per cent. While the banks and home builders have seen the biggest gains, retailers have benefited too. The markets like strong majorities and they also tend to favour fiscally conservative governments, too.
“Margins will remain tight and the Tories won’t be giving much away that will ease that struggle in any significant way”
On Brexit, the Tories couldn’t have been clearer. The UK will be leaving the EU by the end of January. It won’t have escaped your notice that the prime minister has said he has an “oven-ready” deal. There’s vanishingly little chance it won’t sail through both houses of Parliament.
That leaves us with the future relationship. Though we’ve little inside track on what that will finally look like, we know the government want this done sooner rather than later. Expect a redoubling of effort on negotiations and the details of a Canada-plus-style free trade deal emerging with the daffodils in early spring. But negotiating a deal in time for the end of 2020 remains unlikely, which leaves the hard-Brexit door open.
It follows too, that if we are to dispose of Brexit in short order, the focus of our national politics might once again focus more diligently on domestic legislation. That, frankly, is where the retail industry has needed the government’s focus for far too long.