U.K. Prime Minister Boris Johnson will retain power with a thumping majority after his Conservative Party secured its best election result since 1987.
With just one vote left to be counted, the Conservatives had secured 364 parliamentary seats, a majority of 78 in the House of Commons. The result, which proved even more decisive than pollsters had forecast, follows a bitterly-fought and divisive election campaign.
At victory celebrations in central London, Johnson told an audience that the country will now leave the EU on January 31.
“We will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes,” he said.
“You may only have lent us your vote, you may not think of yourself as a natural (Conservative) … You may hope to return to Labour next time round, and if that is the case, I am humbled that you have put your trust in me,” he added.
The top-performing stocks on the Euro Stoxx 600 benchmark were overwhelmingly dominated by London-listed firms. Virgin Money UK, Taylor Wimpey and Persimmon were the best performers, all trading more than 12% higher. The domestic focused FTSE 250 rallied 5% in early deals to reach a new record high.
Yields on the U.K. benchmark 10-year bonds rose 7 basis points in early trade and reached their highest level since early June at 0.895%.
Lasting impacts on the UK
Earlier, Jeremy Corbyn announced he will not be leading the U.K.’s opposition Labour party in future elections, following what he called a “disappointing night.” Speaking on ITV on Friday, Corbyn said Labour — which is expected to get 203 seats — would go through a reflection process and that he will lead the party during this period.
“This is obviously a very disappointing night for the Labour party with the result that we’ve got,” Corbyn said.
The result of the election is expected to have a decisive effect on the direction that Brexit takes, three-and-a-half years since the U.K.’s referendum on EU membership. It could also have lasting impacts on the United Kingdom itself with a strong showing for the Scottish National Party.
Johnson’s Brexit divorce deal has been agreed to in principle by the U.K. Parliament but is yet to be fully ratified by lawmakers. It’s likely that the bill will come back in front of MPs (Members of Parliament) as early as next week.
There have been deep divisions over the deal on offer and how close the U.K. should stay aligned to the EU after its departure from the bloc. The future of the border between the Republic of Ireland and Northern Ireland has also been a major sticking point.
The impasse and political chaos in the House of Commons ultimately led to Thursday’s snap general election as Johnson lost the slim majority he held in the U.K.’s lower chamber of Parliament. The vote was the first to be held in the winter months since 1974 and the first December election since 1923.
Analysts at Citi said the large majority would give Johnson the scope to shape Brexit in a softer or harder direction. However, they believed there wouldn’t be any “softening” from the U.K. leader and he may try to run down the clock as the government tries to negotiate a future trade agreement with Brussels in a one-year transition period.
“With limited time to negotiate, we expect the U.K. and the EU would likely only agree core elements of a new Canada-style free trade agreement, such as zero-tariffs in time for the end of the transition, under this scenario,” the analysts said in a research note.
“The U.K. would gain freedom to deviate from EU regulation, negotiate its own trade relations and set its immigration rules. However, exiting the single market and customs union would see the re-imposition of non-tariff barriers, as well as lingering uncertainty in key areas such as financial services.”
Anatole Kaletsky, chief economist and co-chairman of Gavekal Dragonomics, said the election result was a “big surprise” which creates “a lot of upside” for British assets.
He believes that in the long term Brexit could damage the U.K. economy, but “for the next year or two this creates a lot of upside for the pound, for a lot of other British assets, British property, British domestic stocks.”
Meanwhile, Justin King, the former CEO of U.K. grocer Sainsbury’s and vice chairman of private equity firm Terra Firma, told CNBC Friday that it’s still unclear what sort of Brexit the prime mister would pursue.
“It must be a good thing that we have a prime minister negotiating with a strong mandate behind him. A strong prime minister will be able to do a better deal than a weak prime minister.”
But he added that we still don’t know “which version of Brexit might be on his mind, or indeed on his party’s mind.”