London. THERESA MAY, Britain’s prime minister, called a surprise election for June 8th arguing that she needed a strong mandate for negotiating Brexit. The pound rallied on the news, in the belief that a large Conservative majority would allow Mrs May the flexibility to do a deal with the EU, and see off the hard-liners among her party.For a while, it looked as if the plan was going well. The Conservatives had a 20-point lead in some polls. But the party’s campaign, heavily reliant on the appeal of its leader and the repeated use of soundbites like “strong and stable”, has been misjudged. The manifesto launch was disastrous and included a pledge to charge the elderly (a key Tory demographic) for social care. That pledge was quickly reversed, but Mrs May’s refusal to admit to an obvious U-turn undermined her strong leadership claims.By contrast, Jeremy Corbyn (pictured), the Labour leader, has benefited from low expectations; lots of commentators thought his party might have one of its worst-ever election results. But he has successfully focused on his core vote, making a series of popular promises for higher spending. Whether those promises add up (or represent a coherent plan for a post-Brexit economy) is another matter.
The result is that the polls have narrowed, with the latest from YouGov showing just a five point Conservative lead (less than the margin in 2015). It may be an outlier but it is not that much of an outlier; another poll on the same day showed an eight-point lead. If the YouGov poll were translated into seats, the Conservatives would have an overall majority of just two seats. And the poll was taken after the Manchester bombing, an event that people thought would boost Mrs May’s appeal.
Such a narrow majority would destroy the “mandate” argument, leaving Mrs May in a tricky position ahead of the EU negotiations. (What will she say to the other 27 countries? “I called for a mandate from the British people and they backed me by a narrow margin. Now, give me lots of concessions”). And the pound has duly dropped a bit on the news. But it is actually remarkable how calm the markets are. The FTSE 100 is up today and close to an all-time high. Perhaps it is because they don’t believe the polls; spread betters are still looking for a Tory majority of over 100. And investors don’t even seem to be considering the possibility that the trend might move further towards Labour, or that the polls are wrong in the other direction (underestimating Labour, not Tory, support). The best odds available on Labour are 6-1 against. Any further tightening in the polls towards Mr Corbyn with his plans for higher taxes on companies, investors and executives, and we could see some real wobbles. (The Economist)