As former Prime Minister, Gordon Brown and his family stepped down from service, the new Conservative leader, David Cameron has finally stepped in to Number 10 Downing Street. In the most exciting, yet controversial general election for decades, the UK has seen a Cameron and his next in command, Nick Clegg from the Liberal Democrats arrive yesterday to his new London office to discuss plans for the UK economy.
Despite signs of a stock market crisis as a result of the UK’s first hung parliament in 70 years, the value of the Sterling has risen slowly, and the FTSE 100 index has also risen modestly in yesterdays closing results. This is a positive sign that the financial markets are not too phased by the new coalition, and that we are not headed for a stock market crash.
However, not everyone shares this view. In an attempt to understand what does the coalition mean for future policy development, many UK voters and businesses believe that a coalition will slow down the decision making process. As stock markets opened for trade in the early hours of the election results morning (01:00), the general consensus of the traders was that a hung parliament would have a negative effect on trade and consequently devalue the pound. Slow decisions would also mean a loss of revenue for business, unable to make investment decisions due to lack of direction from the government. As a result, this may lead to the withdrawal of business from the UK market.
A major dispute already facing our new parliament in the first day of office is that of nuclear energy. Whilst the Tories are supportive of building nuclear power stations, the Liberal Democrats are against this. Simon Hughes, energy spokesperson for Liberal Democrats states that “A new generation of nuclear power stations will be a colossal mistake, regardless of where they are built. They are hugely expensive, dangerous and will take too long to build.”
Commitments to policy specific investments may prove hard to back, if agreement at the leadership level is not joined up. In the case of nuclear, the coalition has managed the conflicting views and issued the following statement on nuclear:
“We have agreed a process that will allow Liberal Democrats to maintain their opposition to nuclear power while permitting the government to bring forward the national planning statement for ratification by parliament so that new nuclear construction becomes possible.”
Furthermore, although both parties agree to reduce CO2 by a minimum of 34%, to meet the targets set by the Labour party in the Climate Change Act (2008), it is not clear on how both parties can deliver this target. For instance, the Tories have stated that they will not support specific ‘low-carbon’ technologies with the aim to let the market decide which technologies to adopt, yet the liberal democrats are more explicit about backing wind-power.
Like Labour, the new coalition agrees to back the 10:10 targets, to reduce co2 by 10% by 2010) and also agree to support the Green investment back which is designed to fund new, low carbon developments. This financing also extends to supporting the ‘greener’ homes agenda, to meet the zero carbon homes target (for new builds) by 2016, as well as the continuation of the feed-in tariff for microgenerators for future clean energy.
What remains unclear is the finance allocated to achieve these aspirations, which is the job of the today’s appointed Environment and Climate Change Secretary, Chris Huhne to agree with his new peers, treasury and members of the public. As new environmental discussions approach in day two of the new coalition, the agenda for environmental policy will become clearer.
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