Snap general election will likely lead to another hung parliament

Lianna Brinded
Head of Yahoo Finance UK
The UK parliament is plunged into political chaos ahead of 31 October Brexit deadline. Photo: Getty

All eyes are on the UK at the moment as Britain edges closer to a total impasse over who has control over the government as well as what the outcome of Brexit will be.

Next week MPs will vote again on whether the UK will have another general election. Earlier this week, politicians blocked UK prime minister Boris Johnson’s bid to call a snap election after he suffered a brutal defeat at the hands of members of parliament who tried to block a no-deal Brexit.

But if another election was to happen — marking the third election and potentially a fourth prime minister for Britain in four years if Johnson loses — analysts and betting markets say that it will be another hung parliament.

READ MORE: No-deal Brexit more a 'swamp than cliff edge'

“We suspect that a snap election now would lead to another hung parliament. For a start, mapping national vote shares to seat predictions is not straightforward, given the structure of the first-past-the-post system,” said Samuel Tombs, chief UK economist at financial services group Pantheon.

“Winning back Brexit party backers might simply lead to bigger Tory majorities in their strongholds, not a slew of new seats.”

Bookmakers are also pointing out that the odds in a hung parliament are happening.

Chart: Smarkets

Sarbjit Bakhshi, Smarkets head of political markets said: “Johnson has found life difficult as PM since parliament returned from summer recess: unable to pass any legislation, removing the whip from 21 Tory MPs, including the father of the House, Ken Clarke, and bearing the humiliation of his own brother saying he will step down at the next election.

“Our markets suggest that he has made a positive impact on the Conservatives’ chance of getting the most seats in a general election, which now trades at 67%; however, an overall majority could elude them as a hung parliament is still the most likely outcome at 59%.”

But Tories are leading in the polls?

The Conservative party are currently leading in the polls.

Chart: Pantheon

But as Pantheon’s Tombs highlights — the only way the Tories would win in an outright majority is “if the electorate voted in line with the latest polls.” Tombs thinks this is unlikely.

“No party has ever won a majority which such a low vote share before,” he said.

“In addition, public opinion likely will shift markedly during the campaign. In the latest YouGov poll, 17% of people reported that they didn’t know yet which party they would vote for. That’s above the 12% six weeks before the 2015 election and in line with the proportion before the 2017 election.”

Deutsche Bank also point out how volatile polls can be:

Chart: Deutsche Bank

But even if that happened, Oliver Harvey, macro strategist at Deutsche Bank said that a general election right now would be “the least worst outcome at this stage.”

“Should it materialise, we see a pre-31 October election as the least worst of all scenarios this week, reducing the prospect of a no deal Brexit,” he said.

“This is because, of the three possible outcomes, two are more likely than not to lead to either an orderly Brexit or no Brexit at all.”

Those cited outcomes are either a remain coalition government, a narrow Conservative majority/Brexit coalition, or a large Tory majority.