The hung Parliament electoral outcome has certainly been a disappointment for markets which were hoping against hope for a clear majority for one of the parties, preferably the Conservatives. The FTSE 100 is floundering as I write this, having now fallen by 11% in the last three weeks, mainly as the result of the Greek debt crisis.

There are, of course, reasons why Gordon Brown, David Cameron and Nick Clegg will each feel disappointed today. Then there are the hundreds of people who are disappointed and angry because they wanted to vote but got locked out of their local polling stations. It is possible they will have another chance to vote within the next year or so.

As someone who takes voting very seriously I am always disappointed that so many people don’t bother. In my local constituency of Guildford the turnout was a relatively high 72.1% but that still means that one in four people couldn’t be bothered. This is strange when there were just a few hundred votes separating the Conservatives and the Liberal Democrats at the last election.

Looking on the bright side the German philosopher Friedrich von Schiller said “Disappointments are to the soul what the thunder-storm is to the air.”

The market jitters over the election result should be relatively short lived. The companies that populate the main UK stock markets derive around 70% of their earnings from overseas. Furthermore, where our clients have moved onto our new investment proposition they will also be aware that their portfolios are broadly diversified and have a large proportion which is not invested in the UK.

By far the bigger problem is Greece. We in the UK are particularly vulnerable because our indebtedness as a country is not much better than that of Greece, except for the important fact that we are expected to repay our debt over a longer timescale, so some of the pressure is off us.

Helpfully, ratings agencies Moody’s and Standard & Poor’s have said that a hung parliament will not put the AAA status of Britain at risk, repeating their earlier comments that it is the economic policy that comes from the government, not the government itself, that counts. What will be necessary in fairly short order, is a credible plan to start reducing the deficit.

The disappointment that markets, and probably most of us, feel at this time will quickly pass as the politicians sort themselves out. The bigger threat to our investments and pension funds is the uncertainty that all this is creating at a time when we are expecting to face big headwinds as a result of the problems in Europe.

The crisis for Greece that is having such an effect upon us was made much worse by the procrastination and dithering of the leaders of various European countries. Let us hope that our political leaders understand that this is a time when they need to act decisively.

As I close there is talk of the Conservatives offering one or more cabinet seats to the Liberal Democrats. Let’s hope that one of those is for Vince Cable, the Liberal Democrat Deputy Leader and Shadow Chancellor as he really knows his economic stuff.

Please note that this information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances. 

If you would like to discuss any aspect of your financial planning please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.