Vince: financial markets have nothing to fear from hung parliament

Here’s how the Financial Times reports it:

A hung parliament might frighten the markets, but according to Vince Cable, Liberal Democrat Treasury spokesman, the concerns are “completely and totally irrational”.

The Lib Dems point out that many of the world’s leading economies, including Germany and Italy, hold elections that almost always produce results where the leading party has to do deals with smaller parties. They add that some countries with single party governments, such as Greece, have some of the worst records in dealing with fiscal crises, while multiparty coalitions, such as the one in Sweden in the 1990s, conducted fierce fiscal controls.

The paper quotes Vince saying, “Our own approach to fiscal policy is at least as robust as that of any other party.” It also notes the Lib Dem deputy leader’s advice that having a broad political consensus will be vital for any government trying to push through the inevitable painful cuts of the next few years.

The FT makes a fair point of its own, mind. The uncertainty the markets fear is not that the Lib Dems if allowed into government will let control of public spending rip; rather “the possibility that a minority government would be forced to hold another election within months”.

True enough. Of course, there’s an easy solution: proportional representation combined with fixed-term parliaments would be more likely to allow the formation of a stable coalition which commanded majority support and able to govern for up to four years. Now if only there were a party proposing such a policy …

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5 Comments

  • Andrew Suffield 7th Feb '10 - 6:38pm

    Markets are frightened by everything, including markets.

  • Anthony Aloysius St 7th Feb '10 - 6:53pm

    “The FT makes a fair point of its own, mind. The uncertainty the markets fear is not that the Lib Dems if allowed into government will let control of public spending rip; rather “the possibility that a minority government would be forced to hold another election within months”.”

    In that context, it’s interesting that according to yesterday’s Telegraph:
    “Neither leader, he [Clegg] says now, will get his support without signing up to his “fairness” agenda, which includes raising the entry to income tax to £10,000, extra taxes on the rich, a “pupil premium” to help poorer children, breaking up the banking system and electoral reform.”

    On the face of it, that sounds like a threat to vote down any prospective government that won’t sign up to a rather ambitious set of Lib Dem demands.

  • Ambitious, Anthony Al? I see that as very un-ambitious.

    If either Labour or the Tories failed to sign up to that, they would be signing their own death-warrent for the imminent repeat general election.

    These conditions are the very epitome of reasonableness, for the vast majority of the population, surely.

    Well done, Clegg!

  • In that context, it’s interesting that according to yesterday’s Telegraph:
    “Neither leader, he [Clegg] says now, will get his support without signing up to his “fairness” agenda, which includes raising the entry to income tax to £10,000, extra taxes on the rich, a “pupil premium” to help poorer children, breaking up the banking system and electoral reform.”

    So will he now only vote with Labour this week if he will alow PR?

  • Anthony Aloysius St 7th Feb '10 - 10:30pm

    “Ambitious, Anthony Al? I see that as very un-ambitious.”

    You really think that a goal of getting either the Conservatives or Labour to agree to electoral reform – in the sense of proportional representation, as favoured by the Lib Dems – is un-ambitious? Given that it would effectively eliminate any chance of either party governing alone in the future?

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