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Tuesday 11th of May 2010
May 9, 2010    

ABFA: Hung parliament bad for economy

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by Kay Murchie

Kate Sharp, chief executive of the Asset Based Finance Association (ABFA) believes last week’s hung parliament result could seriously hurt the UK’s economic recovery.

According to many experts, the hung parliament result means that it will be harder to pass legislation and undermine a fragile UK recovery.

Ms Sharp of ABFA comments: “The ABFA supports policy plans to increase the availability of credit to SMEs. However, with a hung parliament it is not clear what party policies will actually be implemented, and this could be to the serious detriment of British business. We hope all parties will work to find a swift resolution.”

The pound has fallen since Friday’s result as the markets are concerned that a weak Government might be unable to reduce the UK’s high budget deficit quickly.

In stark contrast, last month Melanie Baker, economist at Morgan Stanley, a hung parliament would not necessarily be bad news for the UK economy.

A coalition government is likely to quickly agree on reducing the deficit, according to Ms Baker and many other financial experts.

Meanwhile, Simon Hayes, analyst at Barclays Capital, said: “A minority Government may have greater leeway to assemble a credible deficit reduction plan than one that is encumbered by expensive pre-election promises.”

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