Will UKIP be good for sterling?

GBPCHF Exchange Rates Reach Highest Levels Since Mid-March

The political force that was once mocked is clearly the one laughing now. Literally Nigel Farage is there across every media source with a big grin on his face and why not? He must be very pleased to see the party do well and also take great delight in delivering such a deft uppercut to consensus politics. Will UKIP be good for the UK is now a question more people will seriously ask themselves, the one party who have been prepared to tread where others haven’t. Little is covered about UKIP except their stance on the EU and immigration.

To find out more I consulted their website which didn’t tell me anything particularly new. It has been said the UKIP will set their manifesto for the 2015 election this summer at their conference and I look forward to hearing their say on important issues like the economy. The clear thing is they would leave the EU and radically alter the UK’s approach on immigration and government. In debating the benefits and drawbacks of leaving the EU for sterling, you need to focus on the economic issues. It is estimated 40% of the UK’s trade is with Europe which highlights just how valuable the agreements are to our economy.

These markets would of course still be there if UKIP took us out of the EU but surely there would be a immediate negative effect? The UK is seen as a gateway to the European Union and many global businesses have a base in the UK, particularly some American firms with the UK providing a convenient stop-off (Heathrow) on the way to Europe and Asia. UKIP say they will immediately advertise all the jobs advertised to overseas workers to the British unemployed, which sounds positive but again is difficult to quantify. We won’t know what markets think to these as yet unanswerable questions but uncertainty seems likely to be a key theme in a years time. UKIP will essentially be untried and untested which may prove just the factor to ensure Labour or the Conservatives hold power.

It was the race between these two parties which caused the pound to move many cents four years ago as the conservatives took power unexpectedly, this being viewed as positive for the pound. It would appear Labour are still not trusted on the economy from the polls but as is often the case it for politics it is not just a case of which is the most popular but which is the least unpopular. UKIP have probably just sucked up a large chunk of the Anti – European and Anti – Immigration sentiment sweeping the UK and Europe which is often so prominent in times of economic uncertainty.

Despite the pound strengthening and the UK economy now growing it may be that there are still many who have seen no benefit as of yet from the last few years of hardship. I think the trick will be if Cameron can get enough of the prosperity he is now doubt enjoying to be felt by the wider electorate by next year. Failure to get them on side will hand the bait to the others and I think it is fair to say further economic uncertainty for the UK.

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