British Prime Minister Theresa May spectacularly lost her electoral gamble, according to an exit poll that suggested her Conservatives would fall short of a majority in parliament, throwing her Brexit plans into disarray.
The exit poll predicted the Conservatives would win 314 seats in the 650-member parliament and the leftist opposition Labour Party 266 — a "hung parliament" with no clear winner.
May unexpectedly called the snap election seven weeks ago to increase the slim majority she had inherited from predecessor David Cameron and strengthen her hand before launching into arduous divorce talks with the European Union, set to start in just over a week.
Instead, if the exit poll showing strong gains for Jeremy Corbyn's Labour is anywhere near accurate, she risks losing power in what would be an ignominious end to her 11 months at Number 10 Downing Street.
Even if the exit poll has underestimated the number of Conservative seats, as it did in 2015, and the party ends up with a slim majority, May will be so weakened that she may not be able to keep the job.
"MAYHEM" screamed the headline in the tabloid Sun newspaper. "Britain on a knife edge," said the Daily Mail.
The BBC reported that 76 seats appeared too close to call. As the first results came in, it appeared that anti-EU party UKIP had lost a large chunk of its vote share, which had split evenly between the Conservatives and Labour. Pundits had expected the UKIP vote to go strongly to the Conservatives.
Until the final results become clear, it is hard to predict which party might end up leading the next government and steering Britain into the Brexit talks. Political deadlock could derail negotiations with the other 27 EU countries ahead of Britain's exit from the bloc, due in March 2019, before they even begin in earnest. Brexit talks were scheduled to start on 19 June but could now be delayed, a source of major uncertainty and concern for investors.
Senior Conservatives were quick to say exit polls had been wrong in the past. In 2015, the exit poll suggested they would fall short, but when the actual results came in they had a slim majority.
Sterling fell by more than two cents against the US dollar as markets digested the prospect of extreme political uncertainty and even the risk of a second election this year.
"A hung parliament is the worst outcome from a markets perspective as it creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain," said Craig Erlam, an analyst with brokerage Oanda in London.
The exit poll pointed to an extraordinary failure for May, who was enjoying opinion poll leads of 20 points and more when she called the election.
By putting her fate in voters' hands, three years before an election was due, she had hoped to secure a much stronger mandate that would boost her in complex negotiations on the terms of Britain's EU departure and its future trade relationship with the bloc.
Should she be forced to step down as prime minister after this election, that would make her tenure the shortest of any British premier since the 1920s.
During the campaign, she backtracked on a major proposal on care for the elderly, opted not to debate her opponents on television and faced questions over her record on security after Britain was hit by two Islamist militant attacks that killed 30 people.
May was widely derided for endlessly repeating her slogan of "strong and stable leadership" despite her u-turn on the care policy. She gave few policy details and appeared mostly at tightly controlled events. Some critics nicknamed her "the Maybot".
Her opinion poll lead narrowed sharply, although the consensus before the exit poll remained that she would win a majority.
"There will be a huge post-mortem about having the general election, about the manifesto ... about the style of the campaign," former Conservative finance minister George Osborne said on ITV.
By contrast, Labour's Corbyn, a veteran socialist who had initially been written off as a no-hoper, was widely deemed to have run a strong, policy-rich campaign that enthused many followers.
If the exit poll is correct, Corbyn could attempt to form a government with smaller parties which, like Labour, strongly oppose most of May's policies on domestic issues such as public spending cuts.
If Labour does take power with the backing of the Scottish nationalists and the Liberal Democrats, both parties adamantly opposed to Brexit, Britain's future will be very different to the course the Conservatives were planning and could even raise the possibility of a second referendum.
The exit poll forecast the Scottish National Party (SNP) would win 34 seats, the centre-left Liberal Democrats 14, the Welsh nationalist party Plaid Cymru three and the Greens one. Other parties were projected to win 18 seats.
"If the poll is anything like accurate, this is completely catastrophic for the Conservatives and for Theresa May," said Osborne.
Japanese bank Nomura said that based on the exit poll and on the results in the first two constituencies to declare, its election model suggested the Conservatives would end up winning 331 seats, a slim majority. However, it said that it would be able to produce a more accurate forecast when 10 percent of results were in, which will be around 0100 GMT.
who went into the campaign expecting to win a landslide, even a narrow win later in the night would leave her badly damaged.
Brexit in limbo?
May herself had said during her campaign: "It’s a fact that if we lose just six seats, we will lose our majority and Jeremy Corbyn will become prime minister," predicting that the Scottish Nationalists and Liberal Democrats would back him.
Whilst this was campaign rhetoric designed to drive support for her party, it also suggested she saw little prospect of forming a coalition with other parties, almost all of whom are opposed to her Brexit strategy built around leaving the EU's single market, controlling immigration and escaping the jurisdiction of EU courts.
The centre-left, pro-EU Liberal Democrats, who were in coalition with the Conservatives between 2010 and 2015, looked unlikely to go down that route again. They were close to wiped out in the 2015 election.
Their former leader Nick Clegg, who was deputy prime minister during the coalition years, said the party would not prop up a Conservative government.
In Northern Ireland, the Democratic Unionist Party (DUP), a natural ally of the Conservatives, said it would negotiate with the Conservatives if they fell short of a majority, as both parties had common ground.
Any delay in Brexit talks would reduce the time available for what are expected to be the most complex negotiations in post-World War Two European history.
Labour has said it would push ahead with Brexit but would scrap May's negotiating plans and make its priority maintaining the benefits of both the EU single market and its customs union, arguing no deal with the EU would be the worst possible outcome.
It also proposed raising taxes for the richest 5 percent of Britons, scrapping university tuition fees and investing 250 billion pounds ($315 billion) in infrastructure plans.
Updated Date: Jun 09, 2017 07:28 AM