Leaviss: A hung parliament could be good for UK

As a bond investor, I am almost hoping we do get a hung parliament.

History shows us, far from being the ‘anarchy on the street' environment, hung parliaments can deliver unpopular decisions a lot more easily than one single party can.

We have had two examples of this in the UK. In the Great Depression we had a government of national unity, which was able to steer the country through the recession and take difficulty decisions through that time.

In World War II we had a coalition government too. In the country's darkest hour it was able to do all the things that one single partisan political party on its own could not do.

Around the world we see coalition governments that are able to govern properly and well. If we ended up with a coalition government in the UK, a hung parliament where the Conservative government was the single biggest party with the Liberal Democrats supporting them in this role, it will make it easier for the Conservatives to do the unpopular things.

I think the hung parliament would not be bad news for the gilt market, and for risky assets overall. I know people are talking about a collapse in sterling and collapse in markets of some sort if we do come back the day after the General Election and find a hung parliament. If that does happen I would regard that as a huge buying opportunity.

Remember, sterling is already one of the cheapest currencies in the world. Our government bond markets are trading at discounts to European bond markets or the US bond market.

In my view a lot of uncertainty is already priced in. The day a hung parliament is announced it might be the catalyst for getting things done, two parties working through the admittedly large problems the UK has got and sorting them out together in a coalition.

Jim Leaviss is the head of retail fixed income at M&G