It is fair to say that economic issues received the most attention in the recent British general elections. In fact, these swayed voter preferences and turned around all the opinion polls that told a completely different story even a few hours before voting began.

Based on a close follow-up of the campaigns and the many opinions put forward, we may note there was great concern among the public regarding the electoral programme of Labour, the main rival to the ruling Conservatives and for which opinion polls had given an equal percentage of votes.

But Ed Miliband, Labour’s prime ministerial candidate, had a marked tilt to the left on economic matters, such as imposing additional taxes on substantial investments, especially in the real estate sector. This could have led to a freezing of many investments if he had won.

It was expected that such a measure would have consequences for the UK’s reputation as a prime investment destination. Evidence is there from the fact that property transactions that were held up were concluded as soon as the announcement of the election results came through with a sweeping victory for the Conservatives.

A fairly good management of the UK economy created more than 350,000 new jobs and bring unemployment below 2 million. The Conservatives were rewarded with an absolute majority and allowing them to act and pass laws without the need for alliances. This is in contrast to the earlier dispensation when they ruled in alliance with the Liberals.

The success with the economy is not necessarily matched by similar results when it comes to Britain’s integration with the European Union. A referendum on whether or not to keep Britain in the EU will take place in 2017. However, matters look blurry in this respect.

The UK Independence Party — which opposes the country remaining as part of the EU and the laissez-faire immigration policies — gained 12.5 per cent of the votes. It will work strongly for the success of any referendum, especially given that there are 2 million immigrants from EU countries working in Britain and which reduces the chance of British nationals to find jobs. That is even though these jobs are considered to be too menial.

The Conservative led government is expected to achieve more economic success over the next four years, but this will depend on the results of the referendum. Many among them do not want to leave the EU because they are aware of its importance to the British economy, since almost 80 per cent of Britain’s trade is with the EU

Marginalised

Whatever be the result of the referendum, Britain’s situation will be difficult. Its previous policy of neglecting the EU and not joining the euro left much room for Germany to dominate EU decisions without competition.

Britain is the only economic power that is a competitor to Germany in Europe. Therefore, failure in the referendum and Britain’s position in the EU will be marginalised. At the same time Britain will have to continue bearing the high costs of remaining in the Union. This will continue to upset broad categories of its citizens and will gain the UK Independence Party more support.

If the referendum succeeds, Britain will lose its most important trading partners, its exports will lose their competitive strength within the 27 countries of the EU. This would constitute a serious blow to the British economy that is currently rated the strongest in Europe after Germany’s,

The positive aspect is that the Conservatives understand this balance and its importance to Britain. That is why it did not focus on its country’s relationship with the EU during its election campaign.

This means the Party will work towards Britain remaining in the union while exploiting the election’s results and the significant vote gains achieved by the Conservatives and UK Independence parties to get additional concessions from the European Commission.

This includes reducing Britain’s contribution to the EU budget, which will enhance its influence and even the Conservatives’ continuance in power after the next elections. However, the fluctuating moods of British voters are very similar to the volatility of its weather, which makes forecasting a very difficult task.

 

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.