By ADRIAN LOWCOCK 07/05/2010
The result of the General Election should come as little surprise to anyone, with Nick Clegg’s appearance in the first televised debate making a hung parliament the likeliest outcome.
However, there has been plenty of concerns that a hung parliament will be bad for the UK, with indecision crippling any economic recovery and tackling of the debt. Therefore, It is good news that Moody’s came out today stating they did not believe a hung parliament would directly threaten the UK Government’s Aaa rating. This announcement was based on the view that the three party’s solutions to dealing with the debt were all very similar, and the differences so minor that they will not prevent a coalition government. This view, perhaps explains why we have a hung parliament.
So why have markets fallen?
This morning, sterling fell because of the uncertainty surrounding a hung parliament, with gilts following suit, although the latter only gave up the gains made over the last couple of days. Stock markets held up relatively well in the morning, despite the election result and big falls in the US. However, the positive sentiment could not be maintained and global markets dropped, as Europe failed to contain the Greek crisis and credit markets unravelled in what was a reminder of worst days of 2008.
Summary
The UK has been given a reprieve and some time to form a coalition government whilst the rest of the world watches Europe, waiting to see if the €110 billion bailout works or if Athens is left to burn.