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HAS THE UNCERTAINTY RUFFLED THE MARKETS?

<strong>JAMIE DANNHAUSER </strong>LOMBARD STREET RESEARCH<br />The current political uncertainty has had very little immediate impact on the economy. It will be interesting to see whether the Tories will choose to use spending cuts or higher taxes to address the UK&rsquo;s growing fiscal deficit. But so much of the growing deficit is structural that it will be difficult to bring it under control.<br /><br /><strong>ALAN CLARKE </strong> BNP PARIBAS<br />In a really perverse way it&rsquo;s helping because the pound has weakened a little which is effectively loosening monetary policy &ndash; I think we should have a government crisis every week. But the long game is that fiscal policy is going to have to be tightened sharply, and the Conservatives are more likely to do this than Labour.<br /><strong><br />MICHAEL SAUNDERS </strong> CITIGROUP<br />An early election with someone other than Brown as PM would probably mean greater certainty that measures to return to <br />clear fiscal sustainability will be implemented. This would be a plus for gilts although for sterling the advantage of greater fiscal credibility might be offset by the greater likelihood of sizeable fiscal drag on the economy.