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MM leader: Shock election points to unstable future

As soon as that exit poll came out at the top of election night pointing towards a Conservative majority, the shock among political pundits (and indeed the electorate) was palpable.

The pollsters, who had been widely forecasting a hung parliament, had to hastily rip up their predictions. The resounding support for the Tories, as well as the SNP, has meant there will be no return to the heady scenes in the rose garden back in 2010, at least not for another five years.

In the wake of the result, there has been talk of electoral reform to the system that saw Ukip gain four million votes and one MP, and much speculation around who will lead a shaken up opposition Labour party.

But as Cameron holds his first all-Conservative Cabinet meeting for 18 years, advisers need to be wary of what could spell yet more significant changes to the political landscape.

Chief among those is whether the UK continues to remain in the European Union. And not just the decision itself, but the two years of uncertainty leading up to the in/out vote. For the financial services industry, as with other sectors, the EU referendum casts a shadow over where firms decide to base themselves, whether to invest in their business, and perhaps what regulators they would be subservient to.

The new Government will also need to address the state of a different kind of union – Scotland’s role in an increasingly less “United” Kingdom.

The issues outlined above are common to both the EU and the Scotland debate. The implications of the SNP’s performance in the polls are also more nuanced depending on what kind of devolved powers Scotland ends up with. Will they be able to set rates for more than just income tax? What will be the knock-on impact for tax planning, and will this result in a tide of advisers and other financial firms concluding that, business-wise, one side of the border is preferential to the other?

These are big questions, and the answers will undoubtedly be difficult to come by.

But amongst all the noise about Europe and Scotland, we must not forget there will be a raft of changes even without all the political rumblings in the background.

Amongst the Tories’ pledges are funding IHT reform by cuts to higher rate pensions tax relief, expanding Right to Buy, and maintaining what some say is an unsustainable promise on the state pension triple-lock. You almost wish this was a party not prepared to keep its election promises.

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