"A hung parliament will cause a market crash!"
"We need an overall majority or sterling will tank!"
"Uncertainty will kill us all!"
OK, I made that last one up but they are the sort of things senior Tory spokesmen were saying about a hung parliament before the election. And yet, lo and behold no party has an overall majority and we are still fine. Actually, better than fine the FTSE100 is up by nearly 5% this morning.
I expect much of that rise can be attributed to the EU stability package but notwithstanding that, if no one party having overall control was such a big deal you would have expected those rises to have been cancelled out at least and possibly gone into reverse.
Charlotte Gore blogged about this earlier today and said:
“The Tories” they cry, “were BLUFFING! We haven’t got a deal and the markets haven’t crashed! Ooo the liars! ”Ah. No. Sorry. Isn’t it just as plausible that the markets are rising on the back of confidence that a deal will be done (and considering the deadline set by Nick Clegg) at some point today, and that this deal will be putting the economy and sorting out the deficit as their top priority either way?
That's as maybe but that is not what the Tories were saying before the election. They were very clear that a hung parliament per se would be bad, irrespective of any deals. In fact the deals themselves were considered to be part of the problem ("smoke filled rooms" etc.).
So that argument is blown out of the water now. No party gaining an overall majority does not automatically lead to market chaos, even in extremely adverse financial circumstances.
Another prop under the argument against electoral reform has just been kicked away.