The UK election is suddenly wide open and markets are totally discombobulated

Just weeks after it suggested that the Conservatives in Wales would find themselves ahead of Labour on polling day next week, the latest Welsh Political Barometer out this afternoon suggests that Labour is once again retaining and consolidating a dominant position in Wales. A strong Conservative majority is also only a necessary, not sufficient condition for a smooth Brexit.

A new set of polls shows the Labour Party has cut the Conservatives' lead from around 18 points down to single digits.

If this happened, the Conservatives would still be the biggest party - but they wouldn't have an overall majority.

If the YouGov model turns out to be accurate, May would be well short of the 326 seats needed to form a government in June, when formal Brexit negotiations are due to begin.

YouGov firm acknowledged that its predictions were controversial and that they suggested big swings in the usual voting patterns for many Britons. Moreover, one must also take into account that the Conservatives had a sizable victory in the local municipal election. The latter would delay the Brexit negotiations. Analysts at the United States bank believe that a coalition of center-left parties would lead to a "soft" Brexit (preserving privileged access to the EU's single market and not clamping down so hard on immigration), which might be better for the UK economy and its currency (paywall).

Kathleen Brooks, research director at City Index Direct, added: "At this late stage of the United Kingdom election campaign, the pollsters are more divided on the size of the Conservative Party's lead than at any other time during the election".

If the Conservatives finish around three points ahead of Labour - say, 40% to Labour's 37% - that could be enough, if reflected across the country on polling day, for the Tories to lose their majority in parliament.

Mr. Shakespeare said the figures could change dramatically before June 8. On the face of it Corbyn appears to be attracting a strong, and very British, underdog vote - helped by an nearly human performance on TV.

Corbyn is clearly relishing the apparent growing sense of unease among voters that May might not be the tough leader she and her party have claimed and which has been a central feature of the party's election campaign so far. However, fears that Labour's pledge not to "distinguish between migrant labour" could alienate European Union governments particularly in Eastern Europe during Brexit negotiations.

Labour owes some of its rise in the polls to Corbyn's improved rating as voters discover the Labour leader's agreeable, easy manner on the campaign trail.

Why aren't the markets falling more, then?

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