UK election: Why the world is watching

It’s an election that refuses to play by the rules. The U.K. goes to the polls on May 7 and pollsters are still scrabbling for a reliable forecast – in fact, the calls about “how difficult it is to call” have fast become the cliché of the campaign.

What can be said with certainty is that the traditional two-party dominance that has been a feature of British politics since 1945 has been challenged by a range of insurgent parties. Whatever happens on May 7, the U.K.’s political landscape has altered for good. Here, we take a look at why and how this is happening.

In the 18 general elections since the British public put Labour’s Clement Attlee in power in 1945, U.K. politics has been relatively stable, with the left-wing Labour and the center-right Conservative Party winning 9 each.

Within these governments there were seismic changes: the rise of Thatcherism; the birth of the welfare state under Attlee; near-crippling trade union strikes and the dismantling of the British Empire to name a few. Yet, gradually, both the main parties moved closer to the center ground, and the U.K. became one of the safest havens for investors around the world.

Could that be about to change?

The U.K.’s population has become increasingly disillusioned with the two main parties. Whereas in the 1951 General Election, 95 percent of voters backed either Labour or the Conservatives, this time round polls suggest that around only two-thirds of voters will back the two main parties.

Who’s eroding their vote share? The most prominent disruptor is the U.K. Independence Party, whose leader Nigel Farage is a well-known face on U.S. cable news. Yet they’re likely to win less than a handful of seats.

Much more important to the formation of the next U.K. government: the Scottish National Party (SNP) – the size of their win in Scotland could determine whether Labour can form a government post-May 8. There’s also the Liberal Democrats, currently in government as part of a coalition deal with the Conservatives. And another potential player is Northern Ireland’s Democratic Unionist Party (DUP), the least socially liberal of any of the parties sitting in the U.K.’s House of Parliament.

So why are people turning to these parties?

The two candidates to be the next Prime Minister, incumbent David Cameron and Labour leader Ed Miliband, are both white, brown-haired married fathers in their 40s with degrees in Philosophy, Politics and Economics (PPE) from Oxford, who have spent most of their working lives immersed in Westminster politics.

Despite their attacks on each other’s policies they are, in fact, pretty similar on a lot of the basics. Both are committed to deficit reduction; both plan to build 200,000 houses a year and both want to spend more money on the state health provider, the National Health Service.

So when someone comes along who appears to be more natural, anti-elitist or just expressing different views, whether it be Boris Johnson of the Conservative Party, Farage, or Nicola Sturgeon of the SNP, they instantly seem like a breath of fresh air.

Ultimately, because of the U.K.’s first-past-the-post system, the struggle for power will come down to less than 100 out of the U.K.’s 650 parliamentary seats. It’s these constituencies, that are most vulnerable to a swing away from the incumbent, that have become the focus of relentless campaigning in recent weeks.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.