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In a turn of events that surprised even close observers, Britain has voted for continuity, as it swept the ruling Conservative Party back into power, putting both fiscal austerity and the prospect of an in-out referendum on the EU firmly on the agenda.
Contrary to pre-election polls that had predicted a hung Parliament, the Conservatives were returned to power with a majority in Thursday’s general election, as the Labour Party saw its parliamentary dominance in Scotland virtually wiped out by the Scottish National Party, and lost marginal seats in England to the Conservatives.
As soon as the first exit poll predicted a clear Conservative lead at 10 p.m. local time on Thursday, the sterling rallied strongly both against the euro and the dollar, as the prospect of a long period of uncertainty and political haggling dwindled. The FTSE 100 also surged on Friday morning.
But the election result is unlikely to change bilateral relations between India and the UK, which has remained on an even, if unremarkable, keel under both the Labour and the Conservative governments.
On Friday morning, Prime Minister Narendra Modi tweeted a message of congratulations to David Cameron. Within government it remains to be seen who will take the place of Vincent Cable, the Liberal Democrat Business Minister who played a prominent role in promoting trade between the two countries in recent years. Cable lost his South West London seat to the Conservatives. From the perspective of Indian business, the result presents a mixed picture. While they are likely to welcome some Conservative policies – its low tax, de-regulated housing and labour market policy, and clear austerity agenda – their enthusiasm is likely to be tempered by the Conservative Party’s tough immigration stance and the prospect of a referendum on the EU.
Indian businesses in the UK have long complained that rigid immigration rules reduced the flexibility of their UK workforce, as 700 Indian businesses have their European headquarters in the UK.
However in the balance, business will look positively on the results, says Deepak Lalwani of London-based consultancy Lalcap.
“A stable government is always good news, even if some of the policies may not suit.”
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