UK election: political risk is back

POLITICAL risk is back in the UK. Having just recently avoided a break-up of the political and economic union, the UK is preparing to hold a general election as the fixed five-year parliamentary term comes to an end.

The election on May 7 is set to be one of the most unpredictable in history as smaller parties take a greater share of votes. A range of outcomes are possible, but no clear favourite for investors. What is certain is that the result will not be clear cut, and may delay the UK's austerity plans.

When excluding the three mainstream political …