Notes on Brexit - 31.10.19

ARQ Economic & Business Intelligence take an insightful look into the impact of Brexit on business.

• The Tories are well ahead in the polls with a lead over Labour of up to 10%. In normal circumstances, that would easily give the Tories an overall majority.
• The Tory strategy – to unite all the Brexit voters – is also politically sensible. If they can see off the Brexit Party and bring in Brexit supporting Labour voters, they should win.
• Also the Remainers are divided. Labour’s policy of trying to split the difference is difficult to explain.
• However there are a number of reasons why the Tories may not do as well as they should.
• First, they have already written off a number of seats. They accept that they will lose seats in Scotland and London. Ruth Davidson’s demise has left the Scottish Tories much weaker, although they may continue to benefit as the most vocal pro-Union party. London Tory voters – particularly in their heartlands of Richmond, Wimbledon, Kensington and Chelsea – are overwhelmingly Remain and, as they showed in the 2017 general election by voting Labour in Kensington, they may punish the Tories. The loss of these Tory seats could be as high as 30.
• So Tory strategy is to win the ‘rugby league’ (working class) towns in the north. They may have some success but will it be enough to make up for the losses? This is doubtful. A lot of northern voters may be disillusioned with Labour but their dislike of the Tories is visceral. Theresa May tried this strategy and fell well short. As one northern Labour MP put it, ‘the problem for the Tories is that in my constituency, my Brexit voters are more Labour than Brexit and my Remain voters and more Remain than Labour’.
• There will be a lot of tactical voting by Remainers (who tend to be university educated and care more about Remain than traditional political allegiances). Many will vote for the Remain candidate most likely to dislodge the Tory. In addition there is likely to be some sort of pact between Lib Dems, Plaid Cymru and the Greens involving withdrawing candidates so as not to split the vote.
• So our assessment is that as things stand now, although the Tories are in the strongest position, their chances of an overall majority are evens at best. And they have to win an overall majority to be in government because they have no allies in other parties.
• What would it mean if there were to be a hung parliament? To stay in government, Boris has to win a majority as he has no potential allies among opposition parties including the Democratic Unionists who would only back the Tories if they agreed to reopen the withdrawal agreement. Liberal Democrat Leader Jo Swinson is saying that her party will not support either Boris Johnson or Jeremy Corbyn as Prime Minister. This is sensible positioning for them. It may also give cover to moderate Labour MPs post-election not to have to support Corbyn as PM. It is possible that Labour MPs (who would still be overwhelmingly anti-Corbyn) would force a new Leader. However it is also possible that Swinson might agree to allow Labour to go into government but without formal Lib Dem support. All will depend on the numbers. It could be messy.
• Our assessment is that in the event or a hung parliament, Corbyn could struggle to be PM. A coalition or minority government is possible but it would likely be more centrist taking in the majority of Labour MPs with Lib Dems and others.

Download it here: Notes on Brexit 31.10