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Political risk fears grow as UKIP wins second parliamentary seat

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UKIP has taken a second seat in Westminster after winning the Rochester and Strood by-election, adding to concerns over the outcome of the general election next year.

The party defeated the Conservatives by 2,920 votes, securing a second seat in parliament for Mark Reckless, after winning its first seat just last month.

He collected 42.1 per cent of votes in the poll, while Conservative rival Kelly Tolhurst lagged behind with 34.8 per cent of votes.

The newly elected MP said the win proves UKIP could win the general election next May and party leader Nigel Farage (pictured) described the win as “massive”.

Last month, M&G’s bond veteran Jim Leaviss warned of the growing possibility UKIP may end up in a coalition government after the election next May, following its successful win of the first parliamentary seat.

Official polls conducted in October pointed to increasing support for the UKIP party, with data from the Guardian suggesting it could win as many as 30 constituents in the election next year.

Leaviss warned the results of the election could cause a sterling crisis: “This time it may be politics that will cause a sterling crisis. I think politics will be much more important for the UK in terms of markets and currencies than it is typically.”

Meanwhile, multi-asset managers have begun reducing their UK equities exposure on expectations the upcoming election could cause further market turbulence and deter foreign investors from allocating to the UK.

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