theresa_may

We have been here before – in 2010. Actually, the crisis back then was in many ways more serious, but the UK soldiered on – somehow. But this time, it is not the Lib Dems that provide stability, instead, the Tories look towards the Democratic Unionist Party.

 

We too easily forget, back in 2010 the UK was recovering from its worst economic crisis in 80 years. By the time of the election, there were real fears of a repeat – sterling had fallen precipitously before the election – there was talk that interest rates would have to be hiked significantly to stop the pound from crashing out of sight.

And it took several days before David Cameron and Nick Clegg announced that they were, in fact, best friends.  And then the era of austerity was born.

Austerity may have been a flawed policy but, for a brief time, the UK sat in a very precarious position.

That was then.

The UK is in crisis, again, but this time, to be frank, it is self-inflicted, in more ways than one.   The decision to instigate Article 50 earlier this year, and only a few months before an election, was perhaps an even worse decision than the one to call a snap election.

This time, only the Democratic Unionist Party (DUP) can save the UK from political chaos.

The DUP, under the leadership of Arlene Foster, was pro-Brexit.  “Brexit means Brexit,” she said, “but that doesn’t mean that we close our eyes to the challenges that are there.” The DUP approach to the EU was a little hard to understand. It was pro-Brexit, but in a letter to Theresa May, Ms Foster outlined a catalogue of concerns.

Nonetheless, it does seem as if the hard Brexit camp will be in the ascendency.  Which presumably, is the precise opposite of the outcome Ms May had hoped to achieve by calling an election.

Sterling is down – the prospect of hard Brexit always does lead to a fall in the pound. Against the dollar, sterling fell from 1.2925 dollars yesterday morning to 1.2695 at the time of writing. Against the euro, it has fallen from 1.1513 to 1.1348 – to put that in context there were 1.1970 euros to the pound in mid-April.

What next?

Alfred Hitchcock once said that to create a film rich in excitement, “Start with an earthquake and then let the tension rise.” After Ms May called the snap election, Donald Tusk (President of the European Council) Tweeted: “Brexit was directed by Alfred Hitchcock, first an earthquake and the tension rises.”

But maybe UK politics is now being directed by David Cronenberg in the style of his film the Fly – “be afraid, be very afraid.”

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