Boris Johnson has finally given in to pressure from his own party and government officials and will step down as Prime Minister of the United Kingdom.
Johnson was forced to make that decision on Thursday after losing the support of his ministers and colleagues in the Conservative Party, who have said publicly and privately that he is unfit to govern.
After days of fighting for his job, nearly all of Johnson's allies have abandoned him, after the latest in a string of scandals ended his willingness to support the president.
How do investors view the waiver? Aside from the political section, how will markets react?
Azad Zangana, senior European economist and Europe strategist at Schroders, says Boris Johnson's resignation will trigger "a dispute over the leadership of the Conservative Party and the leadership of the country's government that is unlikely to be resolved before autumn." . This opens a long period of uncertainty about the direction of the country and the economy.”
Now, the prospects depend on who Johnson's replacement is. For Zangana: “a return to traditional conservative politics will likely bring some austerity in the coming years, but also a return to pro-business policies. Yet another populist politician could lead to a continuation of the same approach to the economy.”
On the other hand, and according to Ben Laidler, global markets from multi-asset investment platform eToro, it appears that markets “welcome the move towards less political uncertainty, with no general election until January 2025, and with possible cuts, to support the struggling economy.”
Furthermore, Laidier reminds us that “markets are not economies”. In this sense, for the global market strategist at eToro, “despite rising inflation in the UK, falling economic growth and political uncertainty, the FTSE 100 is the least bad performing stock market in the world this year. It was down just 4%, versus 20% declines in the US S&P 500 and German DAX, benefiting from its combination of cheap commodity stocks and high dividend defensives.”
And who will be the new leader? Conservatives will now have to choose a new leader, a process that could take about two months. At the moment, it is unclear whether Johnson will continue in an interim role or if he will be able to do so while the person who replaces him as head of government is chosen.
The past 24 hours have been the most turbulent in recent British political history, Johnson's support has evaporated and his Chancellor of the Exchequer, Nadhim Zahawi, who was not appointed to the post until Wednesday, has asked his boss to step down.
Boris Johnson came to power almost 3 years ago, promising to finally carry out the United Kingdom's exit from the European Union.
Thus, from the initial enthusiasm, it happened that he was disowned by his own colleagues.
The chaotic approach of his style of government, in addition to a series of scandals, exhausted the patience of his lawmakers and the general public.
Sources: investing.com
