The UK’s ‘hung parliament’ is unlikely to
result in an exodus of wealthy private banking clients or paralyse
the economy but plans to deal with the deficit need to be produced,
according to senior UK-based private bankers.
The UK general election resulted in the
Conservative party winning more seats than its Labour rivals, but
short of a majority.
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Sources suggest a Conservative coalition with
the Liberal Democrats is a possibility but the exact makeup of the
UK’s next government is likely to take several weeks to
finalise.
Malcolm Glaister, Lloyds International Private
Bank’s director in charge of ultra high net worth
clients, said the election result was something of an
anticlimax, with an exodus of wealthy clients unlikely despite the
political uncertainty.
“We do have clients that are thinking about
moving aboard, because they do not like the next 8-10 years of
austerity packages. But I see those as a minority, the majority of
our clients have business, family in the UK [and will remain],” he
said.
He said clients are worried about capital
gains and income tax increases but the very wealthy families will
continue living in London.
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By GlobalData“The political instability over packages for
resident non-domiciled will be an issue – what are they going to
change next will be an issue,” he said.
In a special election report before the result
was declared, Sarasin & Partners chief investment officer and
managing partner Guy Monson said a hung parliament would not
‘paralyse the economy’ but would actually enact credible
policies.
“Several factors are encouraging for the UK:
the political willingness to act is strong; the new government will
have a full legislative term to do so and probably the requisite
legitimacy and public support,” he said.
“The financial markets will not be too
surprised [by the election result],” said Kleinwort Benson’s chief
investment officer Jeremy Beckwith.
“But it is now very important, following the
Greek crisis and its contagious effects on markets in Portugal,
Ireland and Spain, that there is a seriousness of intent and a
credibly detailed plan to deal with the deficit brought forward
fairly quickly,” he added.
The FTSE 100 was down 2.6% at close of
trading on 7 May.
