After weeks of wrangling, there was no outright winner of the UK general election, with both the Conservatives and the Labour party failing to secure a majority. Commentators had suggested that UK Prime Minister Theresa May called an election back on 18 April to achieve a stronger negotiating position as Britain leaves the EU, with polls generally suggesting that the Conservative government will end up bagging more seats and comfortably returning to power. June 8th’s results obviously showed differently. This unexpected result has a number of implications, including what it means for Brexit negotiations, and whether a hung Parliament may result in a ‘softer’ Brexit than markets had been anticipating.

Market reaction within UK: As with other recent geopolitical events that resulted in an unexpected outcome, there is some inevitable volatility for currency and stock markets. The FTSE 100 index of Britain’s biggest companies jumped in the wake of the election result, but the Pound fell in value. Sterling fell, amid heightened political uncertainty, in turn pushing up share prices. Falls in sterling have typically supported Britain’s biggest stock market, which holds a large proportion of multinational companies that earn much of their revenues overseas. The exchange rate can have a marked impact on their earnings when these are converted back into sterling and this may not be very good for their long-term business cum investment.

Political uncertainty: Despite the surprise outcome, the result of the general election does not mean a change in government, which in-turn means that Mrs. Theresa May remains in office with her pre-elections policies intact, albeit with less conviction. It also means greater political uncertainty in the UK in the coming period, which is bound to take some toll on economic growth of the UK’s Economy. Pre-election, the UK’s economic growth forecast was positive over the long-term - While the Bank of England had lowered its economic growth forecast from 2.0% to 1.9% for 2017, it had increased forecasts for 2018 and 2019 to 1.7% and 1.8% respectively (original 1.6% & 1.7% respectively), provided there is a “smooth” transition to Brexit and also that the government adds to ‘wage growth’ during this period. This now may need to be revised again and this time downwards.

So, why this supposedly surprise outcome? The answer in fact can be traced back to some deep-rooted personal insecurity of the British people that gradually built-up over the last two to three decades. As most recent governments in the UK supported the phenomenon that has come to be known as neoliberalism, what in reality it meant was a rise in corporate power and monopolies, in-turn giving rise to inequality in the society and a focus on finance rather than creating hardcore manufacturing jobs. It is these very policies that directly fed into the crash of 2008 from which Britain is still to fully recover. What an average person on the street wants is not continuation of the same but for the next government to change past priorities and policies that failed to address his concerns.

To instead: bring about an appropriate balance between government and market. When an economy is weak, as the UK economy has been in recent years, there is a need for governments to invest in people, technology, infrastructure and sectors that create jobs, which not only grows the economy today but also in the future. This was clearly not happening.

So no real surprise, that with not enough investment, growth and jobs in the UK economy for more than a decade, this time in elections the voters decided that there was a need to break from the past! They felt that with neoliberalism discredited and austerity failed in Britain the new government needs to rewrite the rules of the economy once again. However, this time in the right way that not only focuses on long-term economic growth, but also brings about the kind of sustainable prosperity that subsequently gets equitably shared. What the election results depict is that it was Jeremy Corbyn’s Labour that got it right in advocating the kind of economic plan that concentrates on the well being of the common people and not the markets or the big corporations. Also, it was impressive on how the Labour planned on financing its economic plans: No voodoo money, but carefully thought-out proposals based on taxing those at the top and ensuring that corporations pay what they should. Their leaders successfully argued that though their actions may slow down growth in the short-term, ultimately their policies would strengthen the UK’s economy and place it on a more secure footing.

So will this be a wake-up call for the Conservatives? It should be, as now with a minority government, Mrs. May will do well by revisiting her election time manifesto and align it closer to the policies Labour had been promising the voters. That is, a long list of investments that going forward the government could and should be making: strengthening infrastructure, such as transport and communications; investment in education; and investment in families, particularly that allows women to make a choice between raising a family and work. By swallowing her pride and adopting such policies – even though they were the brainchild of the opposition – Mrs. May would in fact be taking a step in the right direction, as it would make the Great Britain more unified and Brexit a trifle easier. The lessons though from such a surprise result could be quite far reaching. For example, at home while the PML-N currently feels rather secure in winning another term in the upcoming 2018 elections, they need to be careful. The real underlying sentiment of the voters can sometimes get lost in the euphoria of media publicity and rulers’ over confidence. Going by the present state of the economy, with no real focus on the common man and job creation, PML-N could be making the same mistakes as the Tories made in UK!

The writer is an entrepreneur and economic analyst.

kamal.monnoo@gmail.com