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November 04, 2019

Brexit tactical voting is happening - on both sides

The UK elections are probably not as much of a cliffhanger as UK political commentators suggest. The Tories are well ahead in most of the polls. Tories and Labour have gained support at the expense of the smaller parties. This tells us that tactical voting is happening, and that it is fairly evenly spread.

There are limits to tactical voting in first-past-the-post systems, especially in three-way marginals. Brexit as the dominating issue favours tactical voting, but there are limits. There are Remainers who cannot get themselves to vote for Jeremy Corbyn, just as there are Leavers who dislike Boris Johnson and his Brexit deal.

Also noteworthy is the rise in voter registration by young people, which could benefit Labour. According to the Electoral Reform Society there are still 9.4m people missing from the electoral rolls, mostly low-income citizens. 

We expect that the Brexit Party is not going to be the decisively factor. Nigel Farage got some headlines with his Donald Trump interview and his campaign launch on Friday. But his poll ratings are falling. He now said he won't contest a seat himself. We expect the Brexit Party not to win a single constituency. The Daily Telegraph's paranoid lead story this morning is that Farage could be the man who threw away Brexit. But we doubt that very much. Johnson is the only pro-Brexit choice on the menu. 

The fear that Farage could sabotage Brexit has its precise mirror-image on the other side. Tony Blair expressed his frustration about the election, and made a rather desperate call for people to vote tactically anti-Brexit. But they are doing this already without Blair's prompting.

Events can still intrude, but for now this is not a close contest.

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November 04, 2019

Merkel promises 1m charging stations - but doesn't tell us how

We predict that the Merkel era in Germany will be remembered primarily as a period of under-investment - a time when Germany set the wrong priorities. Germany's three largest industries: cars, chemistry and machine tools, are suffering structural crises in an age that rebels against fuel-driven cars and plastics, and in which production technology is being revolutionised by robots and 3d-printing.

Angela Merkel made a bold proposal over the weekend that reminds us of the sheer scale of German underinvestment. For Germany to have a chance to meet its climate targets Germany will need to increase the number of electric charging points for cars from a mere 21,100 today to 1m. Of those 21,100, only a sixth are fast chargers, which are the only ones that really matter. The number of electric cars would need to increase from a current 220,000 to 7-10m over that period.

But this is not a statement primarily about public sector investment. Merkel wants the industry to do most of the heavy lifting, with the government nudging up incentives and providing charging stations in remote areas. We are still looking at very small public spending commitments - in the hundreds of millions - and no indication that this is about to change. What we found particularly interesting was Merkel's assertion that Germany should retain the current workforce as the country adapts to new technologies. We don't quite understand how that is possible without a massive shift in public-sector investment. The car industry is already starting to reduce production, with job losses expected in 2020 and likely to accelerate in 2021 and 2022 when some of the existing job guarantees run out. The next elections are due in 2021. You can do the maths.

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