After the election: relax…coalitions are the new normal

On Wednesday evening, just two hours before the deadline for creating a new government, Benjamin Netanyahu secured enough support to lead a coalition to run Israel. It took “King Bibi” 42 days to build a government despite coming out as the victor in the elections in March. Given his coalition has only 61 seats in the 120 seat Knesset, experts are already predicting it will not last the full four year term. So the Israelis face another election in the near future.


If you think that was tortuous, it took the Belgians from 25 July to 11 October to form a government after their election last year. Even the German leader, Angela Merkel, took two months to cement the grand coalition which she leads, after the Federal elections in 2013.


Coalition horse trading after elections is the norm in most Western democracies. Many of the countries in the EU are run by coalitions, and most run pretty smoothly. The civil services of those nations are well set up for the post-election hiatus.


So why do so many supposedly serious commentators think there is going to be some sort of anarchy tomorrow when – as we all expect – no single party will have enough seats to form a government on its own. Martin Gilbert, the head of giant investment firm, Aberdeen Asset Management, said earlier this week that the financial markets had already taken it in their stride that there would be no immediate government. Melanie Baker, senior UK economist at investment bank Morgan Stanley, told our View from the Bridge audience that as long as one of the main two parties was in charge then the City will feel fairly comfortable.


The fact is that the UK is no longer a two party democracy, we are pluralists and we need to get used to it. Life will go on and business will go on. The main worry our clients voice is that the UK might vote to leave the European Union. Now that would be a cause for panic.

 

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