The result
George Pascoe-Watson, Senior Partner
Just like David Cameron, John Major pulled off a staggering victory in 1992, defying the polls and increasing the Conservative share of the vote against an unelectable Labour leader.
He then spent seven years clinging onto power with a wafer-thin minority, locked in civil war with his own Eurosceptic backbenchers over Britain’s future EU membership.
There are overwhelming shades of history repeating itself this morning as we survey the wreckage of the most gripping election result in living memory.
Leave aside the demise of Ed Balls, the near-certain end of the United Kingdom in the coming years, the unavoidable resignations of Nick Clegg, Ed Miliband and Nigel Farage.
Forget for the moment the car crash for the pollsters.
Mr Cameron is now in charge of his own majority government.
Yet he has pledged an EU referendum in 2017 in which he will recommend Britain stays in.
This will be in stark contrast with a large chunk of his own MPs, the bulk of whom are instinctively Eurosceptic, some of whom will campaign for the exit door.
Party management will become a major headache for Mr Cameron.
And that matters as he tries to negotiate his way through the Commons with a tiny majority.
It will put huge strain on his personal leadership and could yet split the Conservatives at the very time they need to hang together.
The Labour Party will no doubt be pulling itself apart over the corpse of Mr Miliband. Should they have selected his brother as their leader way back in 2010?
Lurching to the Left and letting their machine in Scotland collapse were fatal mistakes.
This should be the moment a united Conservative Party takes a firmer grip across England and Wales and keeps them in power for a generation.
Yet the spectre of an EU referendum looms and as history shows, is always the subject that destroys unity.
The British newspaper media will do little to help the Premier.
Papers like The Sun, The Daily Mail, The Times and The Daily Telegraph are all winners from the 2015 General Election.
The Sun and Mail in particular threw everything and the kitchen sink at Mr Miliband. They can now wholeheartedly claim to have “won it” for Mr Cameron.
This will give them the strength to fight for Britain to leave the EU and to get their armies of readers behind that push.
Mr Cameron risks fighting against his own MPs and the popular press at the very time he should be setting out a new vision for Britain.
As for the rest, what of them?
It is clear that Mr Miliband will have to fall on his sword and Labour will be locked in civil war over its future leader.
Chuka Umunna is a favourite front runner to replace him, as might Yvette Cooper. But with her husband falling, a view might sweep the party that the old guard is finished.
Liz Kendall provides the most likely female candidate to replace Mr Miliband but don’t rule out ex-Para Dan Jarvis.
Whoever leads, it would seem suicidal for Labour if they continue to stay on the Left, turning their backs on the corporate world.
Nick Clegg’s days as LibDem leader are over and he will this morning be kissing goodbye to his armour-plated Deputy PM’s Jaguar.
Tim Farron and Norman Lamb will slug it out for the leadership but with just eight MPs, it will be perhaps a generation before they are worth bothering with.
The biggest question of all is what happens to the United Kingdom.
It is simply untenable for the UK to have a political system where UKIP get 13% of the vote and return one MP and SNP get five per cent share but net 56 MPs.
Indeed, combine the Greens, UKIP and the LibDems and you get one third of the British electorate’s support – represented by just 10 MPs.
It is also unthinkable that we can kid ourselves any longer that the 2014 Scottish referendum “no” vote was conclusive.
For whatever reason, the Scots have spoken. They do not want to be ruled by Labour or Conservatives. And they want independence.
To some this represents tragedy.
The ramifications for industry and the corporate world are huge. As they could be for defence. Scotland is where Britain’s nuclear weapons are housed.
The UK relies on its unity and its nuclear power for its seat at the United Nations Security Council and, some say, its place in the world.
James O’Shaughnessy, Chief Policy Adviser
Five years ago David Cameron failed to win the majority he was predicted. He woke up after an hour’s sleep and made his big, open and comprehensive offer to the Liberal Democrats.
Today, having pulled off one of the most staggering and unexpected victories in modern British politics, Mr Cameron has the luxury of making a different offer: to govern as a One Nation party in the interests of the whole country. And never could this be more needed.
With Labour failing badly and the Lib Dems on the brink of annihilation, constitutional issues will be to the fore of the Conservatives’ agenda. Mr Cameron may have campaigned on the economy but the next and final phase of his premiership will be defined by the very future of the country.
He will need to show daring and imagination to save the union after the SNP’s unprecedented gains in Scotland, and his final act will be – he hopes – to keep Britain in the European Union.
Add to that the importance of devolving power to the cities and regions, House of Lords reform, and English votes for English laws, the Tories find themselves in uncharacteristic territory – with a slim majority but responsible for winning an existential struggle to keep the country together. This is not where Tories like to find themselves but the issues cannot be avoided any longer.
All that is still to come. In the meantime Mr Cameron, his closest ally George Osborne, and their much-maligned campaign director Lynton Crosby can bask in the glory of pulling off one of the greatest shocks in British political history.
The team around Cameron were confident of being the largest party but a majority was seen as wildly improbable. They were shocked and delighted by the exit polls, but even then senior Cabinet Ministers close to the PM privately still doubted the numbers. As it turned out, everyone was wrong.
Time and time again Mr Cameron has shown that you underestimate him at your peril. The essay crisis PM has just pulled off the greatest all-nighter of his career.
Kitty Ussher, Chief Economic Adviser
The pound rose strongly overnight in response to the exit poll suggestion that a protracted period of coalition-building seemed less likely than previously thought. This palpable sense of relief continued when the London markets opened at 8am this morning: sterling settled back up to the level it was at before the campaign started in February, and there were similar corrections in both the gilt markets and FTSE indices.
The Conservatives will benefit from the perception that they are being rewarded for their victory but in reality, as the BBC’s Robert Peston pointed out early in the election night coverage, what the markets really enjoy is an end to uncertainty. Stock markets usually rise faster in the months after a general election regardless of who wins, as political risk is taken out of the system.
This morning, however, the fact that banking and energy stocks rose faster than the FTSE 100 index as a whole suggested that these sectors had suffered from specific anti-business policy positions of the Labour party.
But a clearer-than expected overall result has not wiped away UK political risk as perceived by the financial markets. The now-inevitability of an in-out referendum on Britain’s EU membership in the next two years will spook analysts and traders far more than relatively minor recent wobbles over the constitutional implications of a hung parliament.
Despite their irritation with the European Commission’s penchant for coming up with new legislation on financial services, the City on balance sees advantages to staying in the EU, and so would be concerned by the possibility of leaving. But, as with the general election, it is the uncertainty of the process that is potentially more worrying than the outcome. A protracted referendum campaign that raises not only economic but also geopolitical issues is deeply troubling to the financial markets.
As the dust settles and the character of the new parliament becomes known, other risks will also surface: a stronger voice for Scottish nationalism in Westminster indicates the issue of Scottish independence is not yet resolved; the gap between UKIP’s share of the vote and their number of seats may re-open questions on the voting system, making future elections harder to predict.
So overall while there are palpable signs of relief in the City this morning, the medium term political outlook for the markets is far from risk-free.
Malcolm Robertson, Managing Partner, Charlotte Street Partners
This campaign was dominated by Scotland, for good reason, as results north of the border will have a profound influence on the future governance of these islands.
The SNP, galvanised rather than cowed by defeat in last year’s independence referendum and, crucially, a change of leader, has won 56 of Scotland’s 59 seats with more than half of the vote.
The Scottish Labour Party, for years an unassailable political force, is left with a single seat – in Edinburgh South. The Liberal Democrats retained only Shetland and Orkney, while the Conservative Party keeps its one seat in the south of Scotland.
To illustrate the scale of the political change in Scotland, it is worth noting that the SNP held just six seats in the last parliament, with less than one fifth of the vote. This is a fundamental shift in power that will be felt well beyond Scotland. It will be important to understand the reality of what is driving its voters.
What now? The suggestion that the SNP will rush to a second referendum is misplaced. It is not impossible, but it would require a significant increase in support for independence in the polls before Nicola Sturgeon will consider it.
Of much more interest is the question of what the SNP does with its greater influence at Westminster, as the third-largest UK party. Bridges will need to be built, to replace the trenches dug during an often primitive political campaign.