In last week’s leaders’ debate, David Cameron said it was “disgraceful to try and frighten people”. The press conference delivered by George Osborne and Jeremy Hunt this afternoon on the risk of a hung parliament was therefore surprising.
As he presented a new party election broadcast from the “Hung Parliament” party, Osborne cited evidence that business leaders, including the British Chamber of Commerce, feared a hung parliament. But as Left Foot Forward’s Varun Chandra pointed out last week:
• Goldman Sachs have argued that markets are already “comfortable” with the idea of a hung parliament;
• Moody’s – one of the two most important ratings agencies – have suggested that a coalition government may actually help politicians deal with the deficit.
Indeed, Osborne’s scaremongering unravelled as soon as these points were raised. A reporter from Dow Jones said, “the financial markets themselves don’t seem to be reacting, they haven’t fallen in the last few weeks, they don’t seem nearly as concerned as you are”. While Channel 4′s Faisal Islam pointed out that “gilt yields are down below 4%, the pound’s gone up a little bit”. In response to the Dow Jones question, Osborne unbelievably said:
“There are still many people who hope and expect there’s going to be a Conservative majority. And I think the markets have always, to a degree, in recent months, had that priced in and I think we can deliver that.”
So what is it George? Are the markets scared or not?