The election’s impact on the incoming Financial Services regulation. (Industry Update)

It was a long and extraordinary night. There will be lots of commentary on the election results so we thought we would just add to the noise. It would seem to be the youth vote that has made the difference with early estimates suggesting 72% of the under 25s came out yesterday compared to 43% in 2015. Who said “Youth is wasted on the young!”

Westminster, London, UK election

So how are the markets reacting early doors;

Yields on 10-year gilts fell but FTSE futures recouped early losses and turned 0.3 per cent higher, perhaps on hopes that a weaker pound would aid the economy. The FTSE 100 opened up 1% but the FTSE 250 with the inclusion of smaller firms obviously felt more vulnerable opening down over 0.5% in early trading (Reuters, other media.).

Mark Dampier head of research at Hargreaves has said this morning “There will be no dramatic changes in domestic policy immediately as there would have been under Labour had they got in,” He also said the international nature of the UK market means that in reality the election result matters little for many UK-listed companies. I guess that’s right but depends on where you generate income from – Lloyds Bank was trading 4% lower this morning.

Of course the elephant in the room is Brexit – neither of which can be eaten easily even if in small chunks. Formal negotiations begin within the next two weeks and where does the result leave us? What we do know in Financial Services, is that it has to be assumed we are still full steam ahead with the major initiatives for 2018 and here is why, in our humble opinion:

MiIFD II if the hard Brexit Mrs May promised is going to be fought all the way in parliament other issues will take priority over FS regulation and of course we are still in until the formal divorce is formalised.

GDPR – The UK has driven much of the detail and there is universal support to improve the management of data on individuals

SMCR (Accountability II) – UK only, it may be held up for a delayed start in 2018 but this had universal support that individual accountability needed to be more formally in place to help stop another crisis

Inertia at this time could be a costly mistake.

Big winner of last night – John Curtice, Professor of Politics at the University of Strathclyde who with his team of staff accurately predicted the outcome to within a couple of seats with their exit poll by questioning over 30,000 people coming out from the polling booths yesterday. Give that man a payrise!

Julia Kirkland

Senior Partner