Johnson’s exit threatens a policy vacuum
The resignation of Prime Minister Boris Johnson could leave a policy vacuum in the UK as the Conservative Party embarks on a leadership contest, potentially taking a couple of months. The uncertainty could add to pressure on sterling, particularly if the contest doesn’t result in a clear policy direction. And with major fiscal decisions on hold, the focus on the BoE will increase.
What you will learn:
- The impact of a leadership change on the economic outlook further out will depend on the next prime minister’s views on fiscal policy and the Northern Ireland protocol.
- While candidate pitches are likely to focus on tax cuts, those plans will probably end up watered down.
- But a more pragmatic approach to the protocol would lower the risk of a trade war with the EU.