Are the Tories really better placed to win an overall majority than Labour?

The chart shows the changing market views on whether it’ll be a Labour majority, Tory majority or a hung parliament with the prices expressed as an implied probability.

As can be seen the big change in the past few days has been for the Tories to squeeze ahead of Labour in the market assessment of which of the main parties is likely to secure an overall majority, if at all.

So currently it’s 2.2/1 against the Tories a slightly tighter price than the 2.3/1 that’s available on Labour. The hung parliament option remains the 6/4 favourite.

These prices are crazy and reflect, surely, the inflated optimism that has come from the events of the past month. For there is absolutely nothing to suggest from any of the polls that Cameron is going to come out of the next election as Prime Minister of a majority government.

The spread betting markets, where the number of seats the parties might get are traded like stocks and shares, gives a much better view of punter opinion. The amounts that are being risked are so much greater. The overnight spreads from Sporting Index have CON 276-282 seats: LAB 286-292: LD 46-49 seats.

Spreadfair, which like Betfair is a betting exchange, has CON 278-280.5 seats: LAB 289.5-291.7: LD 48.5-51 seats.

In my betting I put a total of about £100 a seat on LAB>CON movement when news of Monday evening’s ComRes 8% Tory lead began to filter out. Most of this was closed down within a couple of days at a profit of about £550. Remaining is a Labour sell position at £40 a seat with IG Index which I got a 296 seats. The problem with firms like IG and Sporting Index is that the markets have to move quite a bit to cover the six seat difference between the buy and sell prices.

I’ll have to be monitoring things very closely over the weekend in case other polls come out. If there’s a hint of the Conservatives faltering then I’ll need to close down the IG bet very quickly. The next scheduled survey is Populus for the Times which should be in Tuesday’s paper.

Mike Smithson