What will happen after Johnson enters 10 Downing Street on Wednesday?
|So the country has a new Prime Minister and the vote has not come as much of a surprise. Nearly 90% of the eligible Conservative Party members cast their votes and they voted overwhelmingly for Boris Johnson over Jeremy Hunt. In a rousing acceptance speech Johnson promised to deliver Brexit and defeat Jeremy Corbyn, saying he was not daunted by the challenge that lies ahead.
Currency markets in particular have been positioning themselves for a Boris Johnson win for weeks now, fine combing every single of his political comments for views of where he will take the country over the next few months. His staunch Brexit-under-any-cost stance has spooked sterling traders and the currency has been gradually declining since he became the lead contender for the PM position.
The pound was in suspended animation just before the vote was announced, trading down 0.05% at $1.2468 but started sliding immediately after the result.
For the currency a lot of the negative aspects have already been built in, some not only having to do with Johnson but also the overall state of the UK economy which has been weakening since Brexit and is now only a whisker away from recession. The FTSE firmed ahead of the vote of 0.53% at 7554 and then continued to bounce higher.
The big question is what happens after Johnson enters 10 Downing Street Wednesday. Under Theresa May neither the Conservative Party nor Parliament could agree on which way Brexit should happen. Those divisions still remain in place under Johnson and despite a change in tactics he will face much the same challenges as May, both at home and abroad. Two ministers have already resigned in protest at Boris Johnson while Chancellor Phillip Hammond also said he would leave his post if Johnson wins. It is also not clear how many changes to the current Brexit plan European negotiators will be willing to accept.
There has also been speculation that Johnson may call for an early election to build on the fact that the Labour Party under Jeremy Corbyn is heavily fractured and not at all sure to win. Only a very short amount of time now remains to go ahead with the current Brexit plans and Parliamentarians have already started putting building blocks in place that will make it difficult for Johnson to make a decision on Brexit without Parliament’s consent.
Despite the rousing speech Johnson gave after he won the vote the reality of the challenge may yet end up grinding him down as much as it did his predecessor.
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