Theresa May Seeks Snap U.K. Election to Get Brexit Backing

U.K. Prime Minister Theresa May said she will seek an early election on June 8, in an unexpected gamble aimed at strengthening her hand going into talks on leaving the European Union.

The surprise statement came less than a month after she triggered the formal start of Brexit and marks a reversal of her position before the Easter break, when her office insisted an early election wasn’t on the cards.

An election isn’t due until 2020 though her popularity — polls show her Conservative Party is more than 20 points ahead of the main opposition — give her an opening to consolidate her power. The risk is that the election emboldens those who regret voting for Brexit in last year’s referendum or increases support for independence in Scotland.

In her statement, May was clear that she was seeking a mandate for her negotiating stance and markets took the premier at her word. The pound surged to its highest since Feb. 2 on the expectation that May will be able to secure a larger majority than the razor-thin one she inherited from David Cameron — and that it will strengthen her hand during Brexit negotiations.

A bigger majority would hand May a personal mandate from the people and give her greater power over her fellow Tories. That would enable her to pursue the Brexit she has outlined while also giving her room to make the concessions that may be forced upon her by her EU counterparts.

“There should be unity here in Westminster but instead there is division,” she said in a statement outside her Downing Street residence on Tuesday. “The country is coming together but Westminster is not.” A rift in Parliament will damage the government’s ability to make a success of Brexit, she said.

May acknowledged that the decision to call an election meant going back on repeated statements made since last June. She argued that delays in beginning negotiations with the EU gave her a unique window to secure her own mandate, and said threats by opposition parties to try to undermine her Brexit stance made this necessary.

Opposition Weak

But it’s the weakness of the main opposition party, not its strength, that makes this election so tempting for May.

Her current polling lead over Jeremy Corbyn’s Labour Party means she can be fairly confident of increasing her majority, and bringing Tory lawmakers into Parliament who will back her on the flavor of Brexit that she prefers. Moreover, a survey last week by Orb International showed that 55 percent of Britons support her handling of Brexit talks.

Her campaign will be run by Lynton Crosby, who masterminded the Conservatives’ unexpectedly successful campaign in 2015, according to a person familiar with the plans.

“This is Theresa May’s attempt to free herself from some of the constraints she’s under and get the mandate to execute the hard Brexit she’s been talking about,” said Mujtaba Rahman, managing director of the Eurasia Group. “She sees an opportunity to win the election, secure a bigger mandate and execute the hard Brexit.”

A poll on Monday gave the Conservatives a 21-point lead over Labour for the first time in nine years, according to the Times newspaper. May’s party would win 44 percent of the vote, compared with 23 percent for Labour and 12 percent for the Liberal Democrats, the Times said, citing a poll by YouGov.

Unlike almost all her predecessors, May cannot simply ask the Queen to dissolve parliament and call an election. A 2011 law passed by Cameron during his coalition government with the Liberal Democrats means there are two circumstances in which there could be an early election: If two-thirds of the House of Commons votes for one or if the government loses a no-confidence vote and a new administration fails to win a confidence motion within 14 days.

In her statement May said she was taking the first course of action. “Tomorrow I will move a motion in the House of Commons calling for a general election to be held on the 8th of June,” she said. Her office said that if this is passed, Parliament will dissolve on May 3.

Ministers and officials remain in their jobs throughout the election period, May’s spokesman James Slack said, denying that her decision offered the opposite of the sort of “stability” the prime minister said she wanted to deliver.

The vote will need the backing of a substantial number of opposition lawmakers, including many from Labour. Corbyn responded that he welcomed an election, meaning the vote should pass. For the Liberal Democrats, leader Tim Farron also signaled he’d support the motion and urged voters who oppose leaving the EU to back his party.

“If you want to avoid a disastrous hard Brexit, if you want to keep Britain in the single market, if you want a Britain that is open, tolerant and united, this is your chance,” he said.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell