UK Election: Certain uncertainty – TDS

James Rossiter , head of global macro strategy at TD Securities, suggests that it is too early to take a signal from the UK polls as while the Conservatives hold a 10ppt lead over Labour, first-past-the-post means that this is effectively a 3ppt lead.

Key Quotes

“Current polling puts Labour similar to where they started the 2017 campaign at around 25%, while the Conservatives at 37% are below where they started the 2017 campaign (43%). Labour's surge in 2017 shows how uncertain early polling can be.”

“The recent BES points to "the most volatile electorate in modern times", as 49% of voters switched allegiance in the 2010/15/17 elections, and Labour-Conservative switching was at its highest since 1964.”

“Betting markets firmly believe the Conservatives will be the largest party, but a Tory majority is seen as a coin toss (we think this is too high). A Labour minority is seen as highly unlikely.”

“The Brexit Party remains an unknown entity, but we expect them to perform similar to UKIP in 2015 (10% of vote, 1 seat).”