Analysis: Weak government may be just what Britain needs

Britain has voted for a government with little power to do anything of note. That may be just what the economy needs. The hung parliament that emerged from June 8’s election leaves room for a middle-ground approach to tax and spending, while some of the worst manifesto ideas on migration, Brexit and nationalising industries are likely to be consigned to the policy dustbin.

I think Theresa May has won own goal of the season.

— Gary Lineker (@GaryLineker) June 8, 2017

After Prime Minister Theresa May’s Conservative party lost its majority, horse-trading will follow. That might result in a government with a wafer-thin hold on power, or another election within months. While memories of the 1974 hung parliament will resurface, this time is different. The incumbent party has the largest number of seats and the British economy is not in recession.

75% of 18- 25 year olds voted in the UK election. Younger generations are going to change the world and won’t accept the old guard. — Darren Hayes (@darrenhayes) June 9, 2017

Look past the uncertainty, and stalemate has its economic charms. Both major parties were planning to interfere with the ability of companies and investors to create jobs and grow the economy. The Conservatives had proposed levies on foreign workers and a brutal cap on migration that would have left employers starved of talent. Labour leader Jeremy Corbyn wanted to crank up corporation taxes and nationalise rail, mail and energy companies.

The best possible result in the UK election. Sanity slowly returning to European politics.

— Alain de Botton (@alaindebotton) June 9, 2017

Then there’s Brexit. Theresa May had asked for a strong hand; whoever follows her will have a weak one. That might make European trading partners more willing to push out key deadlines or offer transitional arrangements that keep financial and trade flows going. It will certainly mean that ideology takes a back seat to pragmatism, and that a majority is unable to railroad through irreversible decisions.

Article 50 had been triggered and we were on our way. May has put all this in jeopardy. Even David Davis is now making Brexit concessions. — Nigel Farage (@Nigel_Farage) June 9, 2017

The financial industry in particular can consider this a lucky escape. May had virtually pretended the sector didn’t exist, even though finance generates twice as much economic value per employee than the economy overall. Corbyn wanted to instate a punitive financial transaction tax. The surplus generated by the City of London urgently needs to be spread around the country more fairly, but not stamped out of existence. There will be anxiety ahead, for sure. But Britain is not Italy, a country that has had more than 60 governments since 1945, in need of major reforms but with no political party strong enough to push them through. If anything, the UK needs a state with better things to do than meddle too much with the economy. That’s what it is now likely to get.