Analyse fra BNP Paribas:

1. Who could the Conservatives rely on?

Liberal Democrats: Very unlikely The Liberal Democrats were in a coalition with the Conservatives from 2010 to 2015 and were badly damaged by it at the 2015 general election. The Conservatives want to control immigration and leave the single market. The Lib Dems want to remain in the single market. We see little room for compromise on this. Scottish National Party (SNP): No The Conservatives are a fundamentally unionist party, making working with the SNP extremely difficult. The two parties have very different view on Brexit. The SNP does not want to leave the EU or the single market. Attitudes to tax and spending policies differ significantly. Labour: No A grand coalition between the two parties would be unlikely even under more normal circumstances. Currently, the policy agendas of the Conservatives and Labour are the furthest apart they have been since the early 1980s. Labour’s view on Brexit is not clear. It has not ruled out staying in the single market, but neither has it campaigned to stay in, unlike the Lib Dems and SNP. Northern Irish MPs: Possible The only realistic option, in our view, is the Democratic Unionist Party (DUP) from Northern Ireland, but even that is not an ideal fit: although pro-Brexit, the DUP is more socially conservative and opposed austerity measures.

2. How long would it take to agree a deal with the DUP?

There is no formal time limit for agreeing a ‘supply and confidence’ arrangement or formal coalition. In 2010, the Conservative–Liberal coalition took about a week to be agreed. However, the Queen’s speech is scheduled for 19 June. At that stage, any potential government would need to feel confident that it has enough support to get its programme through parliament.

3. Can Labour form a government?

This is very unlikely, as it would require Labour work with the Liberal Democrats, the SNP, Plaid Cymru, the Greens and the DUP. The Labour Party and the DUP are far from natural partners. Any such multiparty government would be very difficult to manage.

4. Can Theresa May remain as leader?

We think the prime minister has undoubtedly been weakened, with a 20pp lead in the opinion polls having faded away and the Conservative Party losing its majority. The problem the party faces is that the election could be taken as a rejection of the policy on ‘hard Brexit’, so installing a leader who strongly supports leaving the single market could be problematic. Equally, electing a ‘soft Brexit’ leader would not go down well with the Eurosceptic wing of the party

5. Can a Conservative minority survive the full term?

This is a big ask, even without the complications of Brexit. Controversial domestic plans, such as those for changing the funding of care in old age, have become more difficult. Mrs May had hoped to be returned to office with a large majority, giving her a mandate for leaving the single market and customs union. But now it is not clear the Conservatives have the backing for this policy. The party might struggle to make it through a full five-year parliament, given the complexities of the Brexit process We think an early election is, therefore, quite possible.

6. Will the Brexit process be delayed?

Formal negotiations about the UK’s leaving the EU were expected to start on 19 June. If the Conservatives can agree a deal with the DUP relatively quickly, it is possible that negotiations could start as planned. Officials could at least begin the process. However, the clear risk is that there will be some delay to ministeriallevel discussions, especially if the Conservatives opt to change leader.

7. Does this make a disorderly Brexit more likely?

We think this is very difficult to say at this stage. The initial reaction might be that the lack of a strong government increases the risk that the negotiations progress too slowly and ultimately fail, or that the UK gets a poor deal. However, it is possible that the greater need for cross-party support for the ultimate deal would soften the Conservatives’ line on leaving the single market. Were this to happen, it would take time to become evident.

8. Will there be a second EU referendum?

This can’t be ruled out, but it is difficult to see how it would solve the current problems. – A second vote in favour of ‘leave’ would mean still having to face the current uncertainty and difficulties. – A narrow vote to ‘remain’ would be controversial and probably lead to more problems for the Conservatives (and possibly Labour) at the subsequent election if there was a resurgence in UKIP support. – It is not clear that the UK could unilaterally reverse the Article 50 process or that all other 27 countries would agree to UK remaining in the EU.

9. Could there be a referendum on leaving the single market?

This is not a central case, but is possible, in our view, if the Brexit process flounders under a Conservative minority government. A vote to leave the single market would give a mandate for a hard Brexit. But a vote to stay would imply that membership of the European Economic Area would be the only option that would, on paper, respect the outcome of both referendums.