A hung parliament could send financial markets into a tailspin and the pound and shares crashing, experts warned last night. Sterling has already fallen nearly five per cent against the US dollar in the past five weeks amid jitters about the outcome of the general election. Experts said last night that a badly hung parliament, with neither major party able to form a stable government, would be likely to send to pound plummeting by a further ten per cent. Sterling has already fallen nearly five per cent against the US dollar in the past five weeks amid jitters about the outcome of the general election . The sell-off could accelerate and spread to the stock and bond markets – driving share prices down and borrowing costs up for the government, businesses and families, analysts warned. A Liberal Democrat analysis released as party leaders prepare for tonight’s seven-way TV debate showed that 98 per cent of polls conducted so far this year to a hung parliament. All the major pollsters are predicting that no party will win an overall majority, and all leading bookmakers now have the shortest odds on such an outcome. Last night, a forecast from pollster YouGov suggested the likely result on May 7 is a badly hung Parliament. It predicted the Conservatives would end up on 297 seats, only slightly down on 2010, Labour 262, the SNP 35, Liberal Democrats 30, losing almost half of their MPs, Ukip four and the Greens one. A second Conservative-Lib Dem coalition would only be able to command a Commons majority of four, making it difficult to form a stable government. Senior Conservatives are understood to have privately discussed the possibility of a three-way coalition, also involving Northern Ireland’s DUP, who currently have eight MPs, to increase the Government’s majority. George Buckley, UK economist at Deutsche Bank, said: ‘The 2015 UK general election is set to be the most unpredictable for nearly a century. There may be no good outcome for investors.’ The pound could fall by ten per cent against the US dollar between the Thursday of polling day and the following Monday if a stable government does not emerge, according to experts at currency firm Argentex. ‘Currencies react badly to political uncertainty,’ said Argentex managing director Harry Adams. ‘If polls continue to churn out mixed results in the lead up to D-day the pound will continue to soften. The real danger for sterling is if a coalition can’t be agreed by Monday.’ Pollster YouGov suggested the likely result on May 7 is a badly hung Parliament. It predicted the Conservatives would end up on 297 seats, only slightly down on 2010, Labour 262, the SNP 35, Liberal Democrats 30, losing almost half of their MPs, Ukip four and the Greens one . Veteran City commentator David Buik, an analyst at stock broker Panmure Gordon, said a hung parliament could be hugely damaging for the investors in stocks and shares such as those saving for a pension. ‘Markets are incapable of dealing with uncertainty,’ he said. He said the biggest fear in the City is a deal between Labour, the SNP and the Liberal Democrats – an outcome that could send the stock market down by ten to 15 per cent ‘in a few weeks’. ‘The negative perception that this kind of government could have on markets could be visceral both at home and internationally,’ said Mr Buik. A hard-hitting report by BlackRock, the largest fund manager in the world, said yesterday that ‘a soothing outcome for the markets is hard to imagine’ given Labour’s anti-business policies and Tory plans to hold a referendum on Britain’ s membership of the European Union. ‘Labour would be tough on business – and might be perceived as lacking fiscal responsibility,’ the US giant said in the report. ‘A Conservatives-dominated Cabinet would pave the way for an unsettling referendum in 2017 on the UK’s EU membership. ‘Whoever wins – and the result could take some time to emerge – will lead a weak government likely to pass only watered-down legislation.’ BlackRock, which invests in major British companies such as Tesco, said weeks of horse-trading to form a government would be ‘harrowing for the UK’.
City fears the impact of an inconclusive election result on the markets.
The pound has fallen almost 5% against the dollar in the past five weeks.
Fears it could fall another 10% if a badly hung parliament after May 7.