Follow Joshua McCallum
Joshua McCallum is Head of Fixed Income Economics at UBS Global Asset Management, where he provides economic analysis to support and challenge portfolio managers. Before joining UBS in 2005, Joshua worked for the UK Treasury, dealing with an eclectic range of topics including international macroeconomics, the UK budget, economic reform in Europe, and post-conflict fiscal policy in Iraq.
The Conservative party’s surprise victory in last week’s UK election replaced uncertainty about potential coalitions with a new uncertainty about the UK’s membership of the EU. The Conservatives have pledged to hold a referendum on EU membership in 2017, unless certain concessions from the EU can be secured. The uncertainty for the next two years is likely to be a negative for business investment and UK growth.
The Federal Reserve appears to be holding steady on its call for the future path of US GDP growth, despite the disappointing Q1 figures. Q1 GDP growth is often much lower than other quarters, primarily due to winter weather and some seasonality effects. The Fed is more focused on wage growth than one quarter of GDP growth. And the most important measure of wage growth is accelerating sharply.
The outcome of the upcoming UK election is very uncertain, and investors will be considering the impacts of the different potential outcome scenarios. The odds of a formal coalition are looking quite low, leaving the UK likely to have a minority government, relying on a partner party or parties with a 'confidence and supply' agreement. We look at the likely market perception of some of the possible outcomes.
The outcome of the UK election on 7 May is very uncertain. The odds of a formal coalition are looking quite low, leaving the UK likely to have a minority government, relying on a partner party or parties with a ‘confidence and supply’ agreement.
Red vs Blue
Mathematical possibilities based on current polls of different strengths of Conservative and Labour-led governments.
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