So, the exit polls were right and Britain has been left with a hung parliament, but what are the next steps and how will this affect the country, industry and, of course, pharma? We run through a 'brief' analysis of the outcome.
Hung parliament
Despite the pre-emptive confidence of the Conservatives and the initial strength of the polls in Theresa May’s favour, the lacklustre campaign and errors in judgement regarding certain policies (dementia tax for example) has meant the party has fallen just below the required number of seats to make a majority government.
Reported on the BBC, former Conservative leader Iain Duncan Smith told the Today programme: “The election hasn’t panned out as we all hoped. It's not great. No-one's going to beat around the bush about that.”
However, he stressed that the important question now lies with what happens, moving forward from this outcome. “Leadership elections suddenly now would be a catastrophe,” he added. “I would say to a few colleagues that they have to be careful what they wish for… it could plunge the UK into crisis.”
Continuing, he stressed that May should now try and figure out, with the Democratic Unionist Party (DUP), if anything can be done. However, reports coming in from BBC Radio Ulster are claiming that it is too early to discuss a potential coalition government with the DUP. Arlene Foster leader of the party told the radio station: “It will be difficult for her [Theresa May] to survive given that she was presumed at the start of the campaign, which seems an awfully long time ago, to come back with maybe a hundred, maybe more, in terms of her majority […] It’s too soon to say what we are going to do yet, we need to see the final makeup of parliament and we need to reflect on that.”
Although without a coalition forming a majority, Britain will be faced with a minority government, which, as reported by the BBC, is something that Labour will be seeking.
Speaking with BBC Radio 4’s Today Programme, shadow chancellor John McDonnell stated: “I don't want to be derogatory but I think she's a lame duck prime minister, I can't see her surviving. And a number of Conservative MPs are already privately saying that her position is untenable. So, I can't see them holding together. If they do seek to do a coalition with the DUP... well, pardon the expression but someone used it during the campaign, it is a coalition of chaos.”
If a minority government is the outcome, however, going on previous examples of this, it will be short-lived and will result in another election in the near future and hence instability in relation to the impending Brexit negotiations.
Hanging in the balance — economy, industry and Brexit
Where does this leave the economy? We have witnessed a decline in the value of the pound overnight, which has continued into today. Although when speaking with the BBC, Mike Amey, a fund manager at investment firm Pimco, said the decline could have been much worse as some had anticipated it would fall by more than 5% — currently the drop is more than 2%.
“On the one hand the markets are worried about the political uncertainty, but on the other this was an anti-austerity vote, which could mean that growth holds up a little better,” Amey said. “If the economy is pump-primed a little more then that can hold the pound up.”
In response to the outcome, Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry (ABPI) said: “This political uncertainty is as damaging for the pharmaceutical industry as it is for other businesses.”
“Business has become used to political uncertainty in recent years, and industry’s ability to stay calm and help keep the British economy moving in the right direction will be critical in the unpredictable days ahead,” stated Terry Scuoler, chief executive of EEF, the manufacturers’ organisation when commenting on the election outcome. “While politicians work out a solution to the leadership of the country, they must put industry first and ensure business receives as much support and backing as possible.”
Obviously, there are implications for the Brexit negotiations with key figures in Europe already voicing their opinions on the matter. The European Commission president, Donald Tusk, has emphasized the deadlines for Brexit negotiations to finish.
Tusk tweet
Paul Hardy, Brexit director at law firm DLA Piper, spoke with the BBC about the outcome stating: “Businesses may find it even more difficult to make big decisions on jobs and investment, given this result's implications for Brexit negotiations, as well as on coherent policy making at home.”
Whereas, in the same report, Simon French, chief economist at investment bank Panmure Gordon, claimed: “The result is good news for the UK growth outlook as it reduces the likelihood of Brexit taking place, and certainly diminishes the likelihood of a hard Brexit."
Although support for May does seem to be coming in from various party members, as reported by The Guardian when speaking with Steve Baker, chair of the influential pro-Brexit European Research Group of backbench MPs: “My principal thought is that it’s essential that Conservative MPs support Theresa May as prime minister, and make it possible to form the most stable government possible.”
“The Brexit negotiating strategy requires a careful rethink. Industry should be at the table, alongside whatever administration is formed, to help ensure we have the right negotiating position, which is something that's been sadly lacking until now,” added Scouler. “The main parties have championed an industrial strategy for Britain and this must not be a casualty of the political turmoil. It is the best blueprint for business in the current circumstances.”
Jeremy Corbyn, the leader of the Labour party, emphasized the importance of a good trade deal in Brexit negotiations when speaking to the BBC: “We are ready to undertake negotiations on behalf of this country to protect jobs and have a sensible trade tariff-free trade arrangement with Europe.”
“Having triggered Article 50, there are crucially important decisions that the UK government and the European Union need to resolve within timelines that were already very challenging,” added Thompson. “We need politicians in the UK and across Europe to be pragmatic, and ensure that they put the interests of patients and public health first. In all scenarios, we will need continued cooperation with Europe on all aspects of medicines regulation.”
As highlighted in our own preamble to the election, there were various positives and negatives from each party manifesto regarding the pharma industry but given there is no clear winner in this political race, we will need to see how the revised policies will stand up when parties need to pull together. We at EPM will be sure to keep you updated.