UKIP Wins 2nd By-election
Mark Reckless became the United Kingdom Independence Party’s (UKIP) second elected MP when he won the Rochester and Strood by-election last night with a majority of 2900, having won the support of 42% of the vote. The by-election was called when the standing MP, Mark Reckless, defected from the Conservative Party and resigned his seat.
Why, you may ask, would an overtly political story feature in a Forex fundamentals article? Well, the reason is that UKIP’s sole, readily identifiable aim as a political party is that the UK should leave the European Union. UKIP’s main stratagem is to blame “Brussels” for everything that popularists feel is wrong with modern Britain from too many immigrants (ostensibly from recent, Eastern European accession states), too much bureaucracy, subversion of the supremacy of British law to European law, absurd regulation and the sublimation of the nation in to a (German-dominated) European federal state. Given that the European Union is the UK’s largest trading partner, the economic ramifications of a UKIP government can readily be seen.
In the recent Scottish independence referendum, the Pound Sterling and the stock market both fell when, briefly, it looked like the Scots might leave the union. Given that the ruling SNP wanted to retain Sterling as the currency of an independent Scotland and that they were Bullishly claiming that they would be fast-tracked for EU membership in their own right, the economic impact of uncertainty over Britain’s EU status (let alone the nation actually leaving) is plain. A number of significant, Scottish-based businesses stated that they would relocate to the remaining UK if the Scots left the union. Whilst British-based firms would be unlikely to leave the UK if the day dawned when the nation was no longer an EU member state, many foreign businesses that have set up in the UK would do so since the UK’s ability to trade with the rest of Europe would be badly disturbed by such an exit.
It is interesting to note that whilst UKIP have dreams of forming a government or, at least, holding the balance of power in a hung parliament, they have no clear economic policy, no stated education, defence or public services position. They were to be seen furiously back-peddling last week over suggestions that they favoured a private insurance model for the National Health Service. That UKIP has significant (albeit minority) support is an indictment on the UK political system and the European Commission’s abject failure to explain the benefits and aspirations of the EU to its citizens (this piece could be written about the situation in many EU states – UKIP’s equivalent in France would be Marie Le Pen’s Front National, for example).