The Brexit calamity continues, as Boris Johnson takes to No 10 Downing Street following the Conservative Party Ballot Paper result, taking strategic control of the UK government.
Former Foreign Secretary and Mayor of London, Johnson now has the responsibility of taking on Brexit negotiations and defining his premiership. According to the ballot paper results, Boris Johnson trumped the results by almost double Jeremy Hunt’s, winning by 45497 votes.
What has happened in the markets?
As at 11:45 BST, London Stocks rose ahead of the PM announcement, the FTSE up 0.64% at 7,562.77.
In FX markets, the pound weakened 0.3% against the US dollar and 0.1% versus the euro.
Who dares wins
Right now, the market awaits any news around a ‘hard’ Brexit, and the heightened prospect over a ‘no-deal’. The worry for many businesses, as well as the Tory party, is that the only option may be to leave on October 31, come what may.
The issue is acute. The SNP – under the direction of one of the most formidable political leaders in the country – has been effectively exploiting the discordant results north and south of the border in the EU referendum, according to Paul Robertson, Senior Consultant at Portland.
“The characterisation that Nicola Sturgeon offers is that this is about more than just membership of the European Union – it’s about contrasting values and the kind of country we want to be. The people of Scotland – the SNP say – must choose: the open, internationalist, egalitarian values that would be embodied by an independent Scotland within the EU, versus an insular, jingoistic, iniquitous future with Brexit Britain.
“The SNP has felt emboldened enough to introduce legislation to the Scottish Parliament to provide for a referendum as early as next year. Legally, of course, no referendum can be held without the consent of Westminster and the outgoing Prime Minister Theresa May has stonewalled the prospect at every turn.” Robertson added.
What does BoJo mean for Businesses?
For business, the rhetoric is hard-hitting.
Mike Cherry, Chair of the FSB said: “Resigning ourselves to a chaotic no-deal Brexit in a little over three months’ time is not helpful. Doing so risks real harm to smaller businesses, which are the least likely to be in a position to respond to economic shocks.
“The UK risks gambling away its reputation as a secure place to invest, and small businesses, many of which do not have the luxury of moving operations to other countries, will suffer as a result.”
The UK market continues to struggle, with a 20-25% undervaluation on the UK stock market versus many other indices, a 2% loss of GDP since Q2 of 2016, and difficulty in recovering this through export orders and investment. The bell-weather continues, with an undervalued sterling.
As we step into the Johnson premiership, the government must quickly address the UK’s position for inward investment from the global economy, and how it might go about attracting international investment.
The Confederation of British Industry CBI) recently published a “Business Manifesto” on Monday in which it urges Boris Johnson to secure a Brexit deal and implement a broader long-term vision for the economy that drives investment.
Carolyn Fairbairn, director general of the CBI, added: “We urge the next Prime Minister to act fast to get the economy back on track”.
FSB National Chairman Mike Cherry, said:
“We need to see a real sense of urgency from this new Prime Minister when it comes to creating a pro-enterprise environment. As things stand, small business confidence is at rock-bottom: political uncertainty has left us unable to invest, grow and plan for the future. The UK has long been one of the best places in the world to do business. It’s crucial that we keep it that way.
“Securing a pro-business EU withdrawal agreement that can command a majority in the House of Commons is task one for this new administration. Brexit has been absorbing government bandwidth for years now, leaving domestic challenges unaddressed. Chief among these are a broken business rates system, spiralling employment costs and derisory broadband and phone connectivity.
“We need to get back to basics. Closing the UK’s productivity gap and increasing GDP growth will only happen when small firms have the political certainty, tax reform and world-leading infrastructure needed to take risks and innovate. Time is of the essence for this new government.”
Prime Minister Boris
Upon announcing the results of the campaign, Boris announced: ‘We are not daunted by the challenge’.