Threadneedle’s Harrison sends out hung Parliament warning
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Threadneedle head of UK equities Leigh Harrison says the UK equity market would regard a hung Parliament at the general election as a disaster.
Speaking today at a Threadneedle roundtable on the outlook for the UK in the run up to the election, Harrison (pictured) said risk appetite for equities would suffer as investors would react badly to uncertainty over the Government’s ability to deal with the public sector debt.
He said: “The equity market would regard it as a disaster. The market is looking for strong leadership, I don’t think either party has got particularly strong leaders but you would have thought with a reasonable mandate for one or the other that they might have the confidence to take some decisive policy steps.
“There is a campaign at the moment to try and get the electorate comfortable with the idea of a hung parliament but I think equity investors will be far more cynical. They would just assume there would be policy stasis, infighting, indecision, all of the things that you don’t really want when you’re dealing with the issues that we’re dealing with. So I think that risk appetite in equities would reduce because the assumption would be that you would get a muddle for a fair while and I don’t think they would regard that as a positive outcome at all.”
Head of government bonds Quentin Fitzsimmons said such a result would be equally unwelcome from a gilt market perspective.
He said: “The increasing possibility of a hung parliament is unwelcome because the balance of power will be unclear at a point in time in the cycle when the deficit issue is absolutely critical.”
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