British Prime Minister and Conservative Party leader Theresa May speaks at the declaration at the election count at the Magnet Leisure Centre on June 9, 2017 in Maidenhead, England.
Meanwhile, a Conservative source told Reuters talks with the DUP have been very positive and constructive so far with broad agreement on some principles, but they are not putting a time frame on when a deal will be done. This indicates the Conservatives may go ahead with forming a minority government without securing the deal first.
There is technically a deadline for a government to be formed. The U.K. monarch was meant to perform the state opening of parliament and deliver the Queen’s Speech, which is written by the government and outlines the legislative agenda for the future, on June 19. This has now been rescheduled to June 21, according to the Press Association news agency citing the Conservative’s Andrea Leadsom, leader of the lower house of parliament.
Official Brexit negotiations between the U.K. and the European Union are expected to start on June 19 but according to some media reports EU’s deputy Brexit negotiator Sabine Weyand is meeting U.K. officials to work out whether Brexit talks can start on schedule next week. The U.K. has only until 29 March 2019 to settle its divorce bill from the EU and negotiate its future trading relationship with continent.
This political uncertainty, as well as fears of another general election if the Conservatives fail to gain the DUP’s support, is expected to damage consumer and business confidence, according to Dean Turner, economist at UBS.
“This will come as the established trends of rising inflation and weak growth in household incomes are already weighing on the economy,” he said in research note published Wednesday.
“Thus, the slowdown in the economy seen in the first quarter of this year is likely to persist for some time; if anything there is likely some downside risk to our already below-consensus forecast.”