Conservative majority now our base case – Danske Bank

Analysts at Danske Bank offered their take on the latest poll, which indicated a big win for the UK Prime Minister Boris Johnson's Conservative Party at the upcoming general election on December 12.

“Late last night the long-awaited results from YouGov's so-called MRP model for the upcoming UK general election were published. We were looking forward to the results, as the model was the only one correctly predicting that Theresa May would lose her absolute majority in 2017. The model is different from traditional opinion polls/seat projections, as it makes its predictions based on a bottom-up approach rather than top-down. YouGov's MRP model predicts the Conservatives will win 359 seats (versus 211 for Labour, 13 for LibDems and 43 for SNP), which would mean a big majority (326 needed for a majority and in practice the number is actually smaller). As we do not have much else to rely on, a Conservative majority is now our base case (we did not have a base case until now). If it turns out to be right, PM Boris Johnson will be able to pass his Brexit deal before Christmas without too many problems, which is why the GBP has rallied. PM Boris Johnson pledged again earlier this week that he will not extend the transition period, which is set to end by 31 December 2020 (may be extended by 1-2 years if agreed before 1 July). This means there is a clear risk of a no-deal Brexit by this date if the UK and EU27 are unable to strike a permanent agreement.”