UK Labour stumbles in early results of pre-Brexit voting

[EDINBURGH] UK voters gave their first verdict on Jeremy Corbyn's leadership of the opposition Labour Party, with early results showing that it sustained losses across England and in elections to the Scottish Parliament.

While Labour led Prime Minister David Cameron's Conservatives after almost two-thirds of local councils in England declared results, Mr Corbyn's party lost seats in a set of elections that are generally used to punish the national government.

In Scotland, where the pro-independence Scottish National Party was poised to score a third consecutive victory, Labour saw its vote share decline across the board in districts that were once its heartland as the Conservatives threatened to usurp it as the main opposition.

Tom Watson, Labour's deputy leader, pleaded for Mr Corbyn to be given time to sell his policies to the public. "It's going to take time for Jeremy to set out his stall," Mr Watson told BBC Television. He still needs "to convince the country it's the right direction."

The initial results suggest Labour may be facing a challenging night after voting across the UK to legislative assemblies in Wales and Northern Ireland and for a new London mayor, as well as to the Scottish Parliament and 124 councils in England.

Thursday's voting was Mr Corbyn's first big electoral test and the last gauge of voter sentiment before the June 23 referendum on the UK's membership in the European Union.

CRITICAL SUPPORT

A bad night for Labour wouldn't necessarily be all good news for Mr Cameron, since it's "critical" for the prime minister that Labour voters are mobilised to support his campaign to keep the UK in the EU, according to Mujtaba Rahman, an analyst at Eurasia Group in London.

Labour losses will probably "sap momentum and, at the margin, reduce Labour's effectiveness as a pro-EU force," providing an "unwelcome problem" for Mr Cameron given the ambivalence of his own Conservatives on Europe, Rahman said.

Also hampering Labour is the rise of the anti-EU UK Independence Party.

Although it took just one parliamentary seat at last year's general election, it won 13 per cent of the vote, and awareness of the party is now at a high with the Brexit referendum looming. UKIP had gained 20 English council seats, suggesting it will improve on the 28 seats it won the last time this set of elections was held.

UKIP BREAKTHROUGH?

A good showing for UKIP may spark renewed market concerns over the possibility of Brexit, according to analysts at Nomura and Jefferies. A gauge of services fell to its lowest level in more than three years in April, following bigger-than-expected declines in manufacturing and construction surveys released earlier this week.

UKIP leader Nigel Farage talked of a "breakthrough," telling the BBC that "the big message now is that UKIP is eating very hard into the Labour vote."

In Scotland, the fight was for second place as the SNP closed in on a second majority under a proportional voting system meant to encourage coalition government.

With Labour's vote share dropping almost 10 percent from the last Scottish election in 2011, the Conservatives led by Ruth Davidson recorded gains to challenge for second place.

Placing third in Scotland, where Labour ruled for a half century, "would be a cataclysmic for morale and so beyond comprehension," said John Mann, a Labour lawmaker at the national Parliament at Westminster. "It's one that Jeremy has to address." SNP leader Nicola Sturgeon said her party was on course for a third consecutive Scottish victory and was witnessing "a huge vote of confidence" in its ability to govern. The collapse in Labour support "is staggering," she said.

Still, of the more than 2,700 English seats up for election, Colin Rallings and Michael Thrasher, professors of politics at Plymouth University, forecast that UKIP would gain 40 and Labour lose 150. As of 5am, Labour's losses were restricted to 28 seats.

"You can gain seats simply because opponents are doing worse," said John Curtice, professor of politics at Strathclyde University in Glasgow, said on BBC. For Labour, "tomorrow morning is beginning to look not as bad as it could have done."

BLOOMBERG