Saturday's election result (or lack of result) looks set to dent business and consumer confidence, and the prospect of yet another period of potentially unstable government in Australia looms large. It would seem increasingly likely that neither party will be able to form government in its own right, and squabbling negotiations with the minor parties and independents seem inevitable.
In the event of a hung parliament, we are likely to see a similar impact on the economy as we saw during the Gillard / Rudd hung parliament era, with government's inability to set and maintain direction leading to economic weakness..... and this time we won't have a mining boom to prop up demand. The impact on retail will likely be a fall in consumer confidence and spending.
Let's hope that as counting continues, a clearer picture emerges!
Counting continues, but it looks as though neither of the major parties has won enough seats in Saturday’s election to form a government. A period of political instability lies ahead as officials from both sides seek the support of minor parties to form government. This process could take days, if not weeks, as will the final counting of votes. The upper house looks even worse, with the splintering of the vote likely to make the new senate even less workable than was the last. This is a terrible outcome for the economy. The lingering uncertainty means confidence probably weakens and, with key policies now in jeopardy, even slower progress on budget repair. This could put Australia’s AAA credit rating even more at risk. Pressure will remain on the Reserve Bank to cut interest rates, and AUD likely weakens.