What’s at stake in the British election

Stephen Beard May 5, 2015

What’s at stake in the British election

Stephen Beard May 5, 2015

Britons go to the polls this week in their most unpredictable general election in decades. No one party seems likely to emerge with an overall majority; a coalition government involving two, three or even four parties is a possibility.

The repercussions of the vote could be enormous, conceivably leading to: the exodus of thousands of wealthy foreigners, the beginning of the end of Britain’s role as a nuclear power, the exit of Britain from the European Union and even the break-up of the United Kingdom.
Here are some of the possible implications:

More than 100,000 people living in Britain today enjoy a special tax status, known as ‘non-dom.’  They may have lived in the U.K. for decades, but they are not regarded as permanent residents — and therefore are not required to pay tax on their overseas income. The opposition Labour Party has promised, if it wins power, to abolish non-dom status. 

Labour’s critics say this could trigger the departure of thousands of ‘non-doms,’ depriving the government of the $12 billion tax they pay on their UK earnings and damaging London as an international financial centre.

Labour will likely form a government only if it has the support of the Scottish National Party. The SNP is vehemently opposed to Britain’s nuclear weapons  program, the Trident submarine system based in Scotland, and has indicated that the price of its support for Labour might be Trident’s removal from Scottish territory.

Labour insists it will not do political deals with national security, and at this stage Trident looks safe. But the country must decide next year whether or not to renew the $150 billion system, and pressure to scale down, or even scrap, this costly weapon could grow.

If the Conservatives win power again, they have promised to renegotiate the terms of Britain’s membership of the European Union and hold an in-out referendum no later than 2017. British business is largely in favor of continued membership if the EU is reformed. Euro-skepticism  has declined amongst the general population, and opinion polls show that a majority of Brits would probably vote to stay in. But European referendums have a habit of blowing up in the politicians’ faces; this vote — if it takes place — could herald Britain’s departure with unpredictable consequences, for Britain and for the rest of Europe.

Mind you, one leading British economist, Roger Bootle, author of “The Trouble With Europe,” thinks Britain would be better off out than in.

If the Scottish National Party wins big, as opinion polls suggest they will, the SNP will not only be able to exert undue pressure on the national government in London, the party will also demand a re-run of last year’s referendum on independence for Scotland. And if the political outcome of this week’s election is as messy as forecast, the case for Scottish separation may grow stronger. 

Next time by a small majority, the Scots could vote to break up their 308-year-old union with the English.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.