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Leader: Markets rejoice at certainty of election result, but Brexit fears persist

AFTER weeks of flatlining in the polls, the Conservatives have won a majority government, albeit a slender one. Whether wafer-thin or not, the result will give business leaders the certainty that stable government brings.

Shares on the London stock market duly rose this morning in light of teh widely tipped resultthat would return David Cameron to Downing Street, and led to the resignations of Ed Milliband, Nick Clegg and the public castration of Ed Balls.

The anticipated final result will give the Conservatives 331 seats in the Commons,  and means the government will likely stay consistent, giving chancellor George Osborne will have the chance to finish the job he started. The Conservative’s long-term economic plan was a major pillar of the party’s campaign, and Osborne can rightly point to the economic record of the last five years and the coalition government’s stewardship of the economy during the recession.

Weeks of uncertainty and horse-trading now look to be avoided enabling the the Conservatives form a government  quickly. However, the optimism that certainty gives business will be short-lived. The outcome of the election raises a host of new and old uncertainties.

Such a slender majority raises questions about the influence of Conservative backbenchers on a David Cameron government, while the SNPs barnstorming performance in Scotland will spark fears of another vote on independence.

A possible “Brexit” or Britain leaving the European Union now looms large in the minds of corporates with a referendum on the UK’s EU membership now likely. Credit rating agency Moody’s has already cautioned that a referendum over Britain’s European future could deeply hurt the economy, and trigger a downgrade.

Clearly, investors love the Conservative victory and business leaders will welcome an end to the uncertainty months of polling and politicking creates. But the future makeup of the UK, and its membership of the EU are surrounded by doubt. British business still has plenty to worry about.

Richard Crump is deputy editor of Financial Director

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