Eventual winner in British polls may have little effect on people's wealth

London:  So will the British election throw up opportunities for Gulf News readers generally — the British expatriates specifically, or, as forecast by "futurists" like Dan Sullivan in "The Producer Groups Future": have politicians fallen behind economists (and quality financial advisers I may add), in their ability to influence people and in their ability to effect wealth? Here goes.

In the recent "olden days", a British election (for those non-Brits) meant the following: a Conservative majority is good for equities and business generally. A Labour majority was a power-to-the-people move which was bad for anyone who was posh (the so-called upper class). There were no rules for the Liberals unless you were over 100 years of age as they hadn't won since the Empire was lost.

How does that impact on now? Firstly, we now have TV as a major, not a minor, variable. Being ugly doesn't help, and is at least as serious as the employment rate for those with votes and the attention span of the average gold fish. TV means that the times are-a-changing in terms of who gets voted in and in terms of how years of attitude can be changed quickly. The Vietnam War syndrome.

TV now means we know it will be close. Or, as they say at The Bank Of England "it aint over until the fat lady sings". Ironically, Brown, the reigning champion, has been done in by private comments made publicly about a fat lady. This leaves, the TV monitors tell us, one of two possibilities: a Conservative majority (albeit tiny) for Cameron, or a "hung parliament" which would involve Brown and Clegg (Labour and Liberal) working together.

The above scenario explains why Cameron is "having a go" at Clegg on TV to persuade the voter towards a majority.

Conclusion one: where is the economic logic in this attack? None. Economic-politics is such that personality and TV are just as important as any issue. It's all going very American.

So the effect of the election on individual finances? Leaning towards Sullivan's predictions, there are two strands of thought. First strand: the issues that are directly affected by the election result; the second strand is composed of critical economic issues of the time, to which the election is a passing footnote.

On issue one: perhaps two direct influences. What impact can any winner have? The problem with a "hung parliament" is that policy decision making gets strangled. Executive at any level needs the power to make a decision, so a hung parliament is a series of hung decision making. Peter Land at Brewin Dolphin describes the state of the UK economy as: "recovery from recession is patchy and slow, unemployment is high, debt as a proportion of GDP is at record post Second World War levels, there remains a fiscal deficit and the trade deficit is semi permanent".

The last point alludes to the fact that Britain doesn't actually produce much, key earnings do not come from trade, they come from tourists, financial services etc. In such an economy you would surely want an executive that can make a decision?

So being "hung" can't be good under any scenario, William Butler said; "The British political classes would have to learn the art of coalition politics. Fiscal tightening could be postponed. The markets would attack both pounds and gilts, threatening the triple A rating". The Brits joining the PIGS (Portugal, Ireland, Greece, and Spain)?

The second area of immediate winner-impact will be in respect of tax. Here, Land would expect the Conservatives to revert to policy basics and build a business friendly environment and minimise tax increases.

If the Liberal-Labour pact occurs, Land expects: "a continuation of recent attitudes and maybe a lurch to the left to appease the Liberals".

So to the second strand and this one backs the Sullivan principle: that most of the issues that affect people's wealth today are already embedded in the economy, and that the election winner will have only a marginal effect on the outcomes. Yes, the election winner will have to deal with it, but their influence will be less important to individuals than the economist/financial adviser, who will have a greater direct impact on personal performance/wealth.

Under this second strand theme I can take four examples of critical individual wealth issues to make the point that the election winner is unlikely to play a primary role in terms of importance. Point One: interest rates. Expect rates to rise, expect inflation to rise. Regardless of the winner of the election, rates cant and won't stay low. This means fix your mortgage rates now. Worried about currency rates? You can also fix your currency rates these days for periods of at least 12 months through forward exchange contracts.

Point Two: Pension Transfers. Post Lehman's, post recession, the majority of British Pensions will not reach their original anticipated benefit. The problem is not solvable by an election. It has mitigating benefits under Pension Transfer options.

Point three: Gilts, as Peter Land covered in last week's space: sell. And point four: globalisation. This has happened and will happen whoever wins the election. Land reminded me last week that a major British Bus Company is now German-owned, "at least the buses will be on time" he quipped.

The writer is chairman of Mondial Financial Partners International