The weirdest election ever – and its incredible consequences

The European elections were never even supposed to happen in the UK. The PM resigned before the results were announced. So much for public opinion – but what happens at midnight on Halloween gets even more terrifying, writes Victor Hill.

The return of Mr Farage

The winners of the European elections in the UK were parties whose policy on the all-encompassing issue of Brexit was clear and unambiguous.

Mr Farage’s Brexit Party – a political start-up that did not exist two months ago – topped the polls with 31.6 percent of the popular vote (on a 37 percent turn-out). They want out now – or at least on 31 October – on WTO terms (aka “no-deal”). They despise the Tories under Mrs May for having botched the Brexit process.

In second place with 20.3 percent of the poll were the Liberal Democrats. They have, throughout the Brexit saga, remained Remain. They think that the referendum result of June 2016 was a self-inflicted wound that should either be ignored or, preferably, reversed by means of a second referendum or People’s Vote. They have been totally consistent.

Labour, which got 15 percent of the vote – third in the UK overall but fifth in Scotland, a country whose politics they dominated for nearly a century – was punished for its policy under Mr Corbyn and his coterie of Marxist Leavers of “constructive ambiguity”. Mr Corbyn’s Brexit policy is as subtle as medieval theology. The party fought the June 2017 general election on a platform of upholding the referendum result – and that has not officially changed. On the other hand, there appears to be no iteration of a Withdrawal Agreement to which Labour could possibly agree. That is because there are a large number of Labour MPs and activists who believe that the EU is a progressive institution and that all Leavers are reactionaries (and racists too).

The Bible tells us that it is best that the left hand does not know what the right hand is doing. Labour is post-Biblical: it is a footballer each of whose legs is playing for opposing teams. The great British public – including many who are most naturally at home in the Labour fold – understood this very well, and raised two indelicate fingers…

The Greens progressed – unsurprisingly, as they are a great brand. They want to save the planet, are kind to animals, are slim (because they are largely vegans) and they are focussed on long-term issues like climate change which they think – quite rightly – can only be fixed at a supranational level. They are also a pan-European movement in a way that no other political grouping is: a Lithuanian Green supporter and a Northern Irish one think in very similar ways.


They are also instinctively anti-business. Their economic policies would result in a drastic fall in economic growth which, amongst other things, would render the welfare state completely unsustainable. Their policies, such as they are, are entirely aspirational and lack administrative detail. When the Greens took over Brighton Borough Council some years ago bin collections ceased, and that fair seaside city began to resemble a third-world cesspit.

Then we come, in fifth place, to the humbled Tories. They polled a titteringly embarrassing nine percent (much the worst result of any election in the last 200 years).

Have attitudes to Brexit changed? No. The British people are still roughly evenly divided – but opinion has strengthened on both sides of the argument. If you add the Brexit Party vote to the Tory vote and the UKIP vote you get 44 percent. Add half the Labour vote and you get 51.1 percent. Then if you add all the Ultra-Remain party votes plus half the Labour vote you get 47.5 percent[i]. That’s chillingly close to the referendum result of June 2016.

Why Mrs May fell

The only way Mrs May could have got her Withdrawal Agreement through a hung parliament would have been to get the votes of those who most feared “no Brexit” and those who feared “no deal”. That would only have remained possible so long as “no-deal” was a tangible possibility.

Mrs May made a lethal error when she failed to oppose the Cooper-Letwin anti-no-deal legislation. That fatally compromised her ability to ram her Withdrawal Agreement through. Once she obtained an extension of Article 50 – first to 12 April and then to 31 October, the deadline was removed, and those MPs who feared no-deal most were let off the hook. If the choice had been leaving on 29 March and leaving with no-deal then Mrs May’s deal might have passed through.

Then the “talks” with Labour collapsed – principally because Labour, quite rightly, perceived that any deal they struck might be undone by Mrs May’s successor. When Mrs May informed the cabinet on 22 May of her latest plan to present the Withdrawal Agreement to the House of Commons for a fourth time with a promise of a vote on a second referendum, the cabinet rebelled. That rebellion, plus private polls suggesting catastrophic results for the Tories in the European election, sealed Mrs May’s fate. She announced her resignation at 10:00 hours on 24 May.

Gordon May loves Theresa Brown

Former PM Brown and Mrs May, by the time she leaves, will have had almost identical spells of time in Downing Street – Mr Brown 1,057 days and Mrs May 1,082 days[ii] by my reckoning.

That is not the only exceptional thing they have in common. They were both elected as the leaders of their party uncontested, so did not have to lay out their stalls in sufficient detail. They were both introverts (you remember Mrs May boasting that she never spends time chatting in the House of Commons bar) who followed in the footsteps of extroverted exhibitionists. Both their premierships were overshadowed by events beyond their control – in Mr Brown’s case the financial crisis and in Mrs May’s case Brexit. Both of these Deus ex machinae destroyed them before they were able to implement their domestic agendas, leaving a poignant sense of unfinished business about their legacies.


Both shared a style of leadership which antagonised others and eroded the loyalty of their advisors – secretive, tetchy and sometimes economical with the truth. Mr Brown’s book about the financial crisis is an exercise in self-exculpation and shows very little self-knowledge. I shall buy Mrs May’s memoirs – but I suspect the book will serve as another door-stop.

Mr Corbyn’s discomfort

This week Mr Corbyn faced a mutiny. Having expelled arch-Blairite Alastair Campbell from the Party for having voted Liberal Democrat, a number of prominent Labour supporters taunted him to expel them too. In Mr Corbyn’s Labour, if you are a mere Holocaust-denier you just get suspended. But if you are a belt-and-braces Remainer who votes for an openly pro-Remain party (definitely not Labour, then) you get chucked out.

I predicted last Christmas that Mr Corbyn could not continue to ride two horses at the same time indefinitely without doing himself an injury. Meanwhile, the Party was arraigned this week by the Equality and Human Rights Commission over its lamentable litany of anti-Semitic incidents.

Ocean’s Eleven

The declared contenders for the Tory leadership could form a football team – there are eleven of them as I write – some (shall we say) more prominent than others. By the time you read this, another four Tory MPs may have entered the contest – so make that a rugby team. The sheer number of candidates accentuates the uncertainty of the final outcome.

Rory Stewart has donned his hiking boots and has been strutting the fells, taking selfies. Matt Hancock has been using the f-word with the Financial Times. Jeremy Hunt has released photos of himself with his photogenic Chinese wife. Boris Johnson has gone to ground.

But whoever emerges as the winner will have a dramatically weaker negotiating hand when it comes to Brexit than Mrs May had in July 2016.

Why the price of “no-deal” has gone up

Thus far, the only question each candidate for the Tory leadership is asked is: Would they countenance “no-deal” on 31 October or not? Most say that they would prefer to avoid “no-deal”, but that it cannot be taken off the table. The problem, however, is that “no-deal” would be much more costly on 31 October than it would have been on 29 March. This is for four main reasons.

Firstly, if Britain had “crashed out” on 31 March the narrative could have been sustained that this was because of European intransigence in trying to impose a deal that was not acceptable to the British parliament. The negative fallout from that event – much reduced trade flows and thus production stoppages in the automotive and aerospace sectors right across Europe, impaired growth and (who knows) the collapse of the odd Italian bank precipitating panic in the markets – all this could plausibly have been blamed on Brussels, which would then have been under pressure to cook up a series of mini-agreements.

That would not be the case given a no-deal Brexit on 31 October. The Europeans would argue with some justification that they had been immensely patient with the British. They had extended Article 50 twice; they had allowed the British to participate in the European elections, thus obliging the EU Parliament to trash plans to re-allocate seats to under-represented countries; and they had quietly allowed the British to choose a new leader whom they had welcomed courteously – only for that new leader to pour a bucket of dung over their heads…


No one can blame the Europeans for the collapse of talks between the ruling Conservative Party and Labour. From across the Channel, in countries where permanent coalitions are the norm, that looks odd – if not perverse. Nor can the Europeans be blamed for the gridlock in British politics. The Europeans would be disinclined to throw Britain the lifeline of a free-trade agreement.

These narratives are important as they confer or deny legitimacy to political events. That is why, second, opinion in Europe is hardening against Britain – and particularly against the English since Scotland is regarded as a kind of damsel in distress repressed by a brutish master, and Northern Ireland is perceived as a victim of English nationalism.

This is most vociferously expressed in France where Dominique Strauss-Khan (remember him – the chap whose leadership of the World Bank was compromised in a New York hotel room) recently wrote that Europe would be better off without les Anglais whom he regards as a ball and chain around Europe’s feet. It is not entirely coincidental that we came bottom in the Eurovision Song Contest with nul points all round…

Third, a new European Commission will convene under a new Commission President on 01 November. The new Commission President (who might be Michel Barnier, though I suspect it will be Manfred Weber) will simply not have the political capital to capitulate to a no-deal UK’s demand for a swift free-trade agreement.

The last thing the new Commission will want to do as its first act is to make concessions to Europhobe populists. Rather, they will seize the European initiative by intensifying the price paid for a disorderly withdrawal – even if that damages the European economy. The new Commission will ruthlessly exploit divisions within the UK – I can imagine that Scottish and Northern Irish MEPs will be invited to stay on in Brussels-Strasbourg and that cooperation in scientific research (CERN etc.) will be ruptured, thus greatly damaging the status of British universities.

Fourth, we now know that big business had prepared itself for no-deal in the early spring by re-stocking and by reducing production. Car production in April in the UK was down by 45 percent as car-makers implemented production stoppages. Only 71,000 cars were manufactured as compared with 128,000 the year before.

But you cannot repeatedly ask big business to adopt the brace position. If automobile manufacturers are required to prepare for no-deal on 31 October, the stoppages will be even more drastic than in April since the resumption of normal service will be more uncertain. PSA (EPA:UG) might decide to close its Vauxhall plants in Luton and Bridgend altogether, especially given overcapacity in the European automotive industry. That kind of event would turn public opinion violently against the Tories and would be ammunition for the Remain camp who would argue – with reason – that Brexit was, as predicted, a disaster. We have already lost British Steel – which could be the first of many.

So, despite the 32 percent (out of the 37 percent of the electorate who bothered to vote – so that’s really 12 percent) who voted for Mr Farage last week, Mr Hunt is correct when he says that permitting a no-deal outcome on 31 October would be “suicide”.

So what will happen between New PM-Day and 31 October?

If Mrs May’s Withdrawal Agreement does not get through parliament by 31 October, no-deal is the default outcome. Unless a new Withdrawal Agreement could be concocted – which almost all the voices coming out of Europe claim is impossible. As far as they are concerned, negotiations with Britain ended on 12 November last year.

Mr Hunt says that, if he becomes PM, he will go to Brussels in good faith with a negotiating team including Mr Rees-Mogg, Ms Sturgeon, Ms Lucas, Archbishop Welby – plus, no doubt, the Dalai Lama and the Archimandrite of Athos…Mr Stewart proposes, more plausibly, that he will convene a constitutional convention – something which, in hindsight, Mr Cameron should have initiated on the morning of 24 June 2016, instead of scuttling away…Mr Stewart’s constitutional convention would most likely consume another month or two before concluding – surprise, surprise – that the nation cannot agree on any course of action…


As far as Labour is concerned, with Mr Corbyn losing authority and now entering the end-game of his leadership (Mr Watson is the man to watch), the party is trending towards a much more overtly pro-Remain stance. Young Labour supporters are overwhelmingly Remain-inclined. Many of the six million who signed the petition to revoke Article 50 in March were Labour supporters. No Remain-supporting Labour MP will support any version of the Withdrawal Agreement. Even those who are agnostic on the EU point out, with some justification, that Brexit on WA terms is vastly inferior to remaining in…

Whoever becomes PM sometime in July will inherit identical parliamentary arithmetic. The Withdrawal Agreement as it stands will never pass, and Brussels will not renegotiate.

That is why I have reluctantly concluded that we Leavers have now lost.

The new PM, assuming he or she survives an initial vote of no-confidence, will announce in late summer, after a conclave at Chequers, that the only way out of the impasse is a second referendum. In that so-called People’s Vote the forces of Remain will be mobilised while many Leavers like me will probably stay at home – or go down the pub and mutter into their pints…

I suspect that Remain would win.

Mr Johnson de-bagged

On Wednesday (29 May) a district court ruled that Mr Johnson – the so-called “front runner” (he isn’t) in the race to Number 10 – had conspired to abuse his office in public life and should face charges. This is the first time in my lifetime that the judiciary has brazenly interfered in the political process – a theme explored, by the way, by Lord Sumption in his current amazingly lucid series of Reith Lectures.

The putative case behind this political “stunt” (as Mr Johnson has called it) is that he abused his office when Mayor of London because he “knowingly lied” by riding around in a bus which proclaimed that the UK pays the EU £350 million a week. There is so much wrong with this – apart from the fact that he was not alone on that bus…

I do not want to rehash the argument here, but I analysed the EU Commission website figures some time ago in these pages, and, having run a spreadsheet that I still stand by, concluded that the 350 million figure was correct – only it was €350 million NOT £350 million.

I predicted last Christmas that Rory Stewart was the man. A regular reader recently got in contact to say that, in response, he had taken out a bet of £20 with a leading gamer that Rory would become PM at odds of 250/1. Well, the odds are now down to 12/1. So I have at least one keenly expectant reader, apart from Evil Knievel.

Game on.

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In the June edition of the Master Investor magazine I’ll be taking a look at the rise of “populism” in Europe. There are many aspects to this important political phenomenon but I want to focus on what will be the economic consequences of the rise of populism and how investors should respond. Populists are often termed “right-wing” because they are hostile to mass immigration, but their economic policies often have much in common with those of the left.

The populists loathe the political elite in Brussels. But there is no longer a single populist party in Europe which is campaigning to leave the EU. Read into that what you will.

[i]The missing 1.2 percent is accounted for by independents.

[ii]Assuming she will step down on 30 June – it could be later.