What does this mean for Brexit?
This outcome massively disrupts the Brexit process. It means the already slim chances of concluding both a consensus on how much the UK pays back to the European Union as part of its exit and agreeing the outlines of a future free trade agreement by 2019 have almost disappeared entirely.
The UK is likely of necessity to shift its focus to the transitional arrangements that might be put in place after March 2019 for two or three years, possibly longer. The UK’s bargaining hand has hence been weakened dramatically and it is highly dependent on the extent to which the EU-27 is prepared to assist the UK Government in extracting itself from the dilemma that it has created for itself. There must be a temptation in Brussels, Berlin and Paris to offer no such assistance in the hope that it might yet be possible for public opinion in Britain to shift back towards remaining in the EU.
The economy may prove critical
There are already signs that the economy is slowing quite sharply. The extent to which this is the direct result of Brexit is contestable, but the perception is that it might prove fundamental to UK political debate over the next few months and years. A persistent slowdown is also likely to be an argument against solving the electoral impasse created last night through another election in the next 12 months. Waiting for an upturn, though, also involves real risks.
This is an instant assessment of an astonishing and unexpected set of events. There are a number of different ways in which matters could evolve. Right now, nonetheless, the reasonable assumption is that if it looks like a car crash then it is a car crash. There will be a de facto Conservative/DUP deal which means that a government can be formed and a sizeable amount of legislation enacted.
The standing of the Prime Minister has been diminished hugely but that does not make it inevitable that Mrs May will have to step down imminently.
The single biggest effect of this outcome is that an election that was called unexpectedly to acquire an explicit mandate for a Brexit strategy may have rendered anything other than a minimalist approach to the Brexit process politically implausible.
Tim Hames is director general of the BVCA.