October 29, 2019 – In a report issued today, Morgan Stanley noted that the United Kingdom’s Conservative Party leads the Labor Party by 10 points and is the current favourite to prevail in parliamentary elections on December 12, but polling volatility may impact the accuracy of polls.

Labor was the last major party to agree to general elections, after Liberal Democrats and the Scottish National Party (SNP) indicated they were for early elections.

Morgan Stanley analysts Jacob Nell and Bruna Skarica wrote:

In our view, the vote in principle for Johnson’s deal persuaded the Liberals and SNP that there was in the end a parliamentary majority for Brexit, and so the only way to stop Brexit was via another election. When combined with the government’s preference for early elections over protracted scrutiny of the deal, this created a parliamentary majority for early elections.

Morgan Stanley expects two possible outcomes: a Conservative win which will validate Prime Minister Johnson’s Brexit deal, or a Labor-led government which could pave the way to a second referendum. “Across all scenarios, the risk of no-deal outcome remains low”.

Contact Jim Doe at JDoe@buymuni.com.