Shares of British companies have plummeted in the wake of the Prime Minister’s decision to call for a snap general election on 8 June.
The FTSE 100 dropped 1.6 percent to its lowest point in more than seven weeks in the wake of Theresa May’s announcement, with all but blue-chip stocks in the red.
The fall in share prices is in part due to a rise in the value of the pound, which was up 1.4% at $1.274 against the dollar, and 1% higher against the Euro at 1.192€ by 15:00. A rise in the value of the pound cuts the value of these revenues when they are converted back into sterling, which is a significant proportion of earnings for the global companies that make up the FSTE 100.
Markets are inherently risk averse, and in at a time when the UK already faces the prospect of a difficult Brexit, few want to see the UK plunged into further political strife with another vote just two years after the last election, and less than 12 months after the vote to leave the EU.
The markets clearly see the election as further risk to UK business, but May claims her decision to call for a fresh election is for national stability, the same reason she gave for not holding an election when the opinion polls were less favourable towards her in September.