AND we’re off.

With Parliament dissolved, the election campaign is now officially under way and the seven main runners and riders are gearing up to weeks of political wrangling.

With the May 7 General Election fast approaching, investors are keeping a close eye on events that could offer clues about the eventual winner.

So, how will the uncertainty surrounding the General Election outcome affect the stock market?

Uncertainty, in general, hurts businesses confidence and the recent Scottish referendum provides some lessons, indicating just how nervous stock markets may become as the election approaches.

While current polls give the Labour Party a slight lead, it's not sufficient to produce an absolute majority and the chance of a hung parliament is high.

With the most likely outcome a formation of another coalition Government, either a Labour or Conservative Government is likely to have to work with stronger smaller parties, such as UKIP.

Should the outcome provoke a weak Government, it becomes more difficult for policies to be implemented to reduce the UK’s large imbalances and this would unsettle markets.

The 2015 election has been flagged as being the most uncertain since 1974.

Another risk for the UK economy is a Conservative majority.

Their promise to hold a referendum on the UK’s membership of the European Union would be a risk for UK equity markets and investors.

With the probability of a British exit or Brexit, running at over 20 per cent, the EU represents around 50 per cent of UK trade and economists predict this would damage UK growth by as much as 0.5 per cent per annum.

Throughout history, elections have not had a significant impact on the UK pound; however, the hung parliament of 1974, which led to a minority Government, undermined it.

Currencies are having an increasing impact on markets and global economies; with uncertainty about UK growth forecasts and the timing of interest rate expectations being pushed back to the end of the year, this removes some support for the pound.

This comes at a time when many Asian countries are creating an upturn in export markets by cutting interest rates, consciously devaluing their currency.

The recent strength in the UK equity market follows past trends, whereby on average, UK markets tend to rise more than ten per cent during the six months before an election.

With May 7 on the horizon, the old adage, sell in May and go away, is likely to be at the forefront of investors’ minds in 2015.

Historically, gilts and equities have performed slightly better with a Conservative led coalition and UK equity markets tend to underperform the European market under a Labour Government, although the risk of Brexit could reverse this trend.

With some sectors likely to benefit from the General Election, the impact is being heavily debated and with market dynamics changing at a faster pace, wealth managers will be monitoring performance closely.

Samantha Dolby is an investment manager at Brewin Dolphin, in Newcastle.

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin. No director, representative or employee of Brewin Dolphin accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change.