Making sense of trends and data

Economic Factors

May Miscalculates

Published 6.9.2107
World events that potentially influence the economic and market models are frequently topics here. Certainly the snap British Election called by Prime Minister (PM) Theresa May qualifies. When she called for the election, the expectation was that the Conservative Party would increase its majority in the House of Commons and strengthen her hand during the Brexit process. Instead, Conservatives lost a net 12 seats, and the previously flailing Labour Party won a net 31 seats.

May must form a coalition government with the Democratic Unionist Party (UDP), and face down critics within her own party calling for her resignation. May wasn’t the only big loser in the election, Scottish National Party’s (SNP) leader Nicola Sturgeon also lost big. The SNP lost a net 19 seats, most of which flipped to conservative. Had the SNP held those seats, the United Kingdom (UK) would have Jeremy Corbyn as Prime Minister. Sturgeon acknowledged that her push for a second referendum on Scottish independence was likely a negative for the SNP in the election. Scotland will not leave the UK, though Sturgeon has yet to officially pull the referendum from the table.

The American right is horrified by the election result, as is the British right. There are plenty of reasons being offered as to why May lost. Theresa May is not a talented politician, that was known prior to the campaign. What was revealed, however, was her completely tin ear as to the public mood. Among the reasons proffered in explanation:

  • The recent terrorist attacks reflect badly on May not just because she was PM, but because she'd previously been in charge of the cabinet office for UK homeland security.
  • The Dementia tax: May's Conservative Manifesto suggested that older people would be required to pay a larger percentage of their own care as they age. This was tagged as a "Dementia Tax," because increasing numbers of British elderly are afflicted by the disease, and care is horrifically expensive.
  • May refused to debate on television, dismissing debates as "squabble shows." This boggles the mind.
  • She couldn't forthrightly answer questions put to her about what she believed. This is more than being a poor politician.
  • Conservatives didn't offer the nation a plan, they just said only May could fix things. However, this explanation makes little sense. The manifesto was a plan, was it not? The people just didn't like what conservatives were offering.
  • Corbyn, in contrast, was affable to voters and answered questions. Corbyn went the Bernie Sanders route and offered more benefits, something that appealed to young voters.
  • Young voters were against her for her support of leaving the European Union as well as her closeness to Donald Trump.

Exit voting indicated that it would be a rough night for the Conservatives, but that they would just win. Instead, Labour's results was better than expected and the SNP's worse. As the night wore on and it became clear that the exit polling was not completely wrong, calls for May's resignation began. Of course she didn't resign, and instead met with the UDP and went to the Queen to ask to form a government.

As every headline and article about the election has noted, May's gamble backfired on her badly. Rather than empowering the Conservatives as they enter Brexit negotiations, she has weakened them. Will it matter? Europeans seem relieved, though it isn't entirely clear how anything really changes. In the end, the real difference might turn out to be that PM May has been reminded of the limits of her party. Or the in-fighting amongst the Tories will lead to her dismissal.

The betting here is that she will never see five years as PM. The only question is when she will lose the job.
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