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FUNDAMENTAL ANALYSIS


the election system is first-past- the-post. Put simply, it requires a political party to win over half of the available constituency seats to form a majority government. The number of seats required to form a majority at this election was 326.


Howe v e r , the election result a


threw surprise.


No political party acquired 326


seats, the


Conser vat ives – who were f a v o uri t e s to win this election – returned the largest number of seats with 318 (eight short of


The


a majority). second


‘Hung Parliament’. It’s where no party has enough seats to pass legislation without


cross-party


support. It’s problematic because it hampers a government’s ability to get things done and implement its own agenda.


FX


This is something the UK has recently experienced. From 2010 to 2015,


the Conservatives and


Liberal Democrats were part of a coalition government, after the former party failed to secure a majority in the 2010 election.


However, the situation is very different


forming formal


have in


2017. All of the smaller parties have ruled out a


c o a l i t ion . Why? Because most


fundamental ly d i f f er en t policy agendas than


The election result threw a surprise No political party acquired 326 seats


largest party, Labour, won 262 seats. We also have a number of smaller parties that won seats:


• Scottish National Party: 35 seats • Liberal Democrats: 12 seats • DUP: 10 seats • Sinn Fein: 7 seats • Plaid Cymru: 4 seats • Green Party: 1 seat


This scenario is known as a The state of play


As the largest party, the Conservatives have the right to try and form either a coalition or minority government.


A coalition is a formal agreement with another political party, which ensures they will work together to pass legislation with a majority.


the


Conservatives . Those parties have


also seen


how the Liberal D em o c ra t s s u f fe r e d


electorally after forming a coalition with the Conservatives.


With a coalition seemingly off the table, the Conservatives can try to govern with a minority government. In this situation, the Conservatives will look to secure a confidence and supply arrangement with a smaller party to get legislation passed. Think of


FX TRADER MAGAZINE July - September 2017 11


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