The United Kingdom's early election campaign is shaping up to be quite ugly, even by the elevated standards of bitterness that have dominated British politics since the vote to leave the European Union in last June's referendum. Investors wondering whether to sell in May should also look at selling because of May -- Prime Minister Theresa May, that is.

European Union officials have stepped right into the trap laid by Prime Minister May, who needs as much European bitterness as she can get ahead of the election to rally the voters behind her. European officials leaked damning details of a train-crash dinner last week in London, where May clashed with European Commission President Jean-Claude Juncker on what the Brexit negotiations will mean.

Among the juicy details reported by German daily Frankfurter Allgemeine Zeitung (FAZ), Juncker is reported to have said, at the end of the dinner: "I'm leaving Downing Street 10 times more skeptical than I was before."

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Reportedly, Juncker believes May is deluded about how easy the Brexit talks will be, and he turned up with the 2,000-page free trade deal with Canada, which weighs 6kg (13 lbs.), to give her an idea of the complexity of trade negotiations with the EU.

Today, another report, this time in the Financial Times, claims that the EU has hiked the amount it wants the U.K. to pay as what the media calls its "Brexit bill" -- money for commitments the U.K. has made as a member state -- to €100 billion ($109.1 billion) from an initial estimate of €60 billion.

May dismissed the FAZ report as "Brussels gossip," but was quick to use it as an example of how the EU was ganging up on Britain and to plead with voters to give her a strong hand in negotiations. Brexit secretary David Davis said today the U.K. will not pay the money the EU supposedly wants.

Investors dismissing these examples as simple electoral bickering may be wrong. After May announced her decision to hold a snap election, U.K. assets benefited from optimism that the vote on June 8 will mean the country will avoid a "hard Brexit" -- one in which Britain crashes out of the EU with no deal, or with very limited access to the single market.

But now the fears of a hard Brexit are coming back. The 10-year U.K. government bond curve steepened after the FAZ report, and the pound weakened this morning after the Financial Times report. A statement today by Michel Barnier, the European Commission's Brexit negotiator, highlights the difficulties ahead. 

"Some have created the illusion that Brexit will have no material impact on our lives or that negotiations can be concluded quickly and painlessly. This is not the case. We need sound solutions, legal precision and this will take time," Barnier said while unveiling the directives for negotiation set by the Commission. 

Besides, there are signs the extraordinarily resilient U.K. economy is losing steam.

Manufacturing PMI jumped in April to a three-year high of 57.3, but this performance is "underwhelming given the magnitude of sterling's depreciation," Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, wrote in a research note.

"In addition, sharp price rises and sustained weakness in investment look set to ensure that growth in manufacturing output slows later this year," he added.

The real estate sector, which has been sustaining the economy with strong price rises for so long, has been weakening for a while, especially in prime locations in central London. The luxury end of the market saw an annual fall in sales of newly built property of 57% last year, while in the rest of London, sales of new flats were down 3.9%, according to data from the Land Registry analyzed by real estate investment fund London Central Portfolio (LCP).

Investors probably should stay away from U.K. property for now, at least until the election result and subsequent statements clarify Britain's position on the kind of Brexit it wants. Staying away from short- and medium-duration government bonds would also be a good idea. These bonds are likely to be very sensitive to suggestions the U.K. will need to borrow more to meet EU obligations and to any electoral promises, such as replacing EU subsidies with cash from domestic resources.

On equities, things are more nuanced. Fluctuations in the pound could open up bargain opportunities for foreign investors in companies that make a lot of their revenues abroad, such as those in the oil sector, telecommunications, chemicals and basic resources.

However, the election campaign is more fraught with risk than usual; so, investors who absolutely hate risk should consider exiting the U.K. market and re-entering once the political fog clears a little.

(Antonia Oprita's 'View From London' column appears at 9 a.m. ET every Tuesday through Thursday on Real Money, our premium site for active traders. Click here to get great columns like this from her, Jim Cramer and other writers even earlier in the trading day.)

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