3rd July 2017

The election result was a major surprise in many quarters. On the news that the UK had a hung parliament, the FTSE100 rose whilst the pound fell back. Theresa May was left looking for political allies to form a government. An alliance was quickly proposed with Northern Ireland’s Democratic Unionist Party, meaning that she could remain in Downing Street, but what now?

It looks likely that many policies that would have been forthcoming if the government had achieved a stronger mandate may now fall by the wayside. These could include the so-called “dementia” tax proposals that were criticised during the campaign and the removal of the state pension triple lock. Further raising of the state pension age could also be put on hold, being too controversial for a government with a slender majority to tackle.

Measures that didn’t make it into the Finance Bill once the election had been called will need to be resolved. These include the reduction in the tax-free dividend allowance which was due to fall from £5,000 to £2,000 with effect from next April and the Money Purchase Annual Allowance for those already taking money from their pension but wanting to continue to save, which was due to reduce from £10,000 to £4,000.

Clearly, there are many problems that need urgent attention such as tackling the lack of affordable housing for young people, the continuing funding crisis in the NHS and the escalating requirement for social care provision for the elderly. However, pressing as all these issues are, the election was ostensibly called to deal with one major thorny problem, Brexit.

With both major parties supporting Brexit throughout the election, it will go ahead. The Democratic Unionist Party is understandably keen to support a ‘softer’ Brexit to secure open border arrangement with the Irish Republic.

For now, sitting tight and keeping focused on your long-term financial objectives is arguably the best strategy to adopt.