Former British finance minister Nigel Lawson said investors have taken account of the risk that the May 6 U.K. election outcome may mean a hung parliament with no single party controlling a majority of seats.
“A hung parliament is undesirable, because you do need the strength of an overall majority in order to be able to behave really decisively,” Lawson, the chancellor of the exchequer under Conservative Prime Minister Margaret Thatcher from 1983 to 1989, told Bloomberg Television today. Still, “the prospect of a hung parliament is already priced into the market.”
Conservative leader David Cameron has gained momentum in his bid to oust Prime Minister Gordon Brown after three instant-reaction polls showed he won last night’s televised debate on the economy. Opinion polls have signaled no party will secure a majority in Parliament.
“The markets are well aware that it’s likely to happen,” Lawson said. “The fact that there is a hung parliament is not going to cause problems in the market. But if the government that is elected does not take decisive action, that really will cause huge problems in the financial markets, and problems for the pound.”
A YouGov Plc poll showed 41 percent of 1,151 viewers questioned immediately after the debate said Cameron performed best. Liberal Democrat leader Nick Clegg was called the winner by 32 percent and 25 percent favored Brown.