Hung parliament would be a disaster, says our City panel

THE CITY fears a hung parliament will lead to a fall in the value of sterling, higher government borrowing costs and lower economic growth.

The City A.M./PHI Panel, which has been specially recruited with Politics Home to represent a cross-section of London’s financial and business community, were to predict the economic impact of a hung parliament.

An overwhelming majority of panellists (80 per cent) said a hung parliament was likely to send sterling “somewhat lower” or “much lower”.

An even bigger proportion of panellists (83 per cent) said the cost of government borrowing would rise if the either of the main parties fail to win an outright majority.

Economic growth would also be lower under a coalition or minority government than it would be under a majority government, according to sixty-two per cent of panellists. However, a significant minority (29 per cent) said a hung parliament would have little impact on the country’s growth rate while seven per cent it would actually push it higher.

But the panel was split over whether a hung parliament would see the country lose its AAA sovereign debt rating Half of panellists thought this was a “very likely” or “fairly likely outcome” while 45 per cent said it was unlikely.

Meanwhile, the majority of panellists (44 per cent) think that the Lib Dems should cut a deal with the Tories in the event of a hung parliament, with a quarter saying the party should go into coalition with whichever party has the largest share of the vote.

But a third of panellists think the Lib Dems will do a deal with Labour regardless of whether it has more votes or seats than the Tories, with a further 17 per cent saying it will join the government of whoever has the most seats.

The findings support a British Chambers of Commerce (BCC) survey which found that nearly two thirds of British businesses are “concerned” or “very concerned” about the potential impact of a hung parliament after the 6 May general election

The BCC said of 300 companies polled, 22 per cent were “not concerned” and 13 per cent thought the failure to secure a working parliamentary majority at the election would be “a good thing.”

Fifty four per cent of respondents said VAT would rise after the election.


•“Either major party should form a minority government, and let the Liberal Democrats provide confidence and supply. If it can't be sustained another election should be called.”

•“India and Australia run fine in a coalition, what makes the media think the UK won't?”

•“A hung parliament would be disastrous for the economy and the democracy at the heart of this country.”

• If there is a hung parliament there should be another election within three months to ensure a decisive outcome.”

• “This is not a presidential election and the TV debates have confused the electorate.”

• “The markets will have priced in the potential outcome of a hung parliament. It's not as dire a situation as a lot of people are making it out to be. Trent bias against the Conservatives.

• “It’s time the media started to focus on policy not personality. The popular appeal of Nick Clegg is only that he's not Labour, he's not Conservative and he has no baggage because no one had heard of him three weeks ago.”

•”There will be no progress for this country under a hung parliament. Voters are voting for the "least bad" party for the most part.”