UKIP gains have wider effects than “shaking-up British politics; they are likely to spark short-term volatility in financial markets”, forecasts the chief executive of one of the world’s largest independent financial advisory organisations.
Nigel Green, founder and chief executive of deVere Group, comments as voters in the Kent constituency of Rochester and Strood go to the polling booths to elect a new representative after their Conservative MP, Mark Reckless, prompted a by-election after defecting to the United Kingdom Independence Party (UKIP).
Mr Green warns: “UKIP gains are changing the political landscape in Britain and these shifts have wider effects than shaking-up British politics; they are likely to spark short-term volatility in financial markets.
“The predicted market volatility until the next election and beyond will be driven by unsettled investors who are expressing uncertainty about the increasing chances of Brexit [a British exit from the EU], which could trigger massive disruption.
“It can be expected that the election campaign will bolster the chances of Brexit due to the possible defection of more MPs to UKIP and the wider growing Eurosceptic sentiment in the UK – which David Cameron appears to be trying to fight by considering policies that could force the UK out of the EU and by the promise of an in/out referendum by the end of 2017.
“In addition, UKIP’s victories are significant as they are dividing the vote of the main political parties, boosting the possibility of a hung parliament and a weaker government.
“Investors would be wise to monitor these potential portfolio risks carefully with their financial adviser.”