InFearing a decisive vacuum in the coming months, UK business leaders are urging Prime Minister Boris Johnson to step down quickly after he announced his resignation as party leader on Thursday. “He should go. Goes out to the next person [sonst] no clean sweeping, ”said Stuart Rose, general manager of Asda’s retail group.
As the “Lame Duck”, the prime minister is largely unable to act, several British media citing Rose’s statement. In view of the turmoil of recent weeks, this situation lasted too long. “It seems there is no one who cares about the serious problems of the economy. This political crisis paralyzed everything. ”
The industry association CBI has also warned of lost weeks, while the conservative party is looking for a replacement for Johnson. Competition for a successor also threatens to politicize some of the economic policy and polarize cultural beliefs.
“We must now fill the political vacuum as soon as possible to work on business confidence, investment and growth to ensure people’s living standards,” said Tony Danker, CEO.
Britain is not doing well economically at the moment. According to the forecasts of the International Monetary Fund, in the coming year, the country will reach the rear of the G7 with growth of just over one percent. Despite several increases, the Bank of England expects inflation to rise to over 11% in the second half of the year.
Johnson announced his resignation on Thursday after days of considerable pressure from his own ranks. According to his own statements, he will continue to rule temporarily until October. Conservative officials are counting on the end of elections by party members before the end of the summer break in early September.
However, many MPs and observers opted for a temporary leadership position with a person who did not play a central role in the disputes of recent days.
Johnson’s relationship with the country’s corporate community has always remained strained. It has been repeatedly pointed out that four years ago, when he was foreign minister, he dismissed business fears about the consequences of a hard Brexit as “fucking business.”
Many businessmen still consider it a serious mistake to push for the most difficult version of seceding from the EU. The Cabinet, and in particular the then Finance Minister Rishi Sunak, obtained approval for support measures at the onset of the Covid pandemic, in particular the introduction of the short-term working model for the first time.
“There are serious problems in this country, not least of which is the very acute cost of living crisis. And when the government is hampered because it is unable to make long-term decisions, it doesn’t help answer that question, said Anand Menon, professor of political science at King’s College London.
S&P analysts also point to the dangers of an extensive search for a replacement. Like the announcement of new elections, “it would weaken the government’s ability to implement political decisions and thus reduce its ability to cope with the threat of recession and pressure on the cost of living.” They also see an increase in the risk of industrial action.
Sam Johnson called on his government at the first cabinet meeting not to do anything that could tie the heir’s hands, new education secretary James Cleverly said on Friday. Nobody has to reckon with new initiatives or changes of direction.
While this announcement should allay the concerns of conservative party colleagues about fundamental policy steps in the last few meters, it should only raise the concerns of economic policy experts. Johnson has announced that he will be presenting a comprehensive new economic program with Sunak next week. Now nothing will come of it.
The end of Johnson’s reign was taken calmly in the financial markets. The pound appreciated against the US dollar and the euro. The main question now is who will replace him, said Matthew Ryan, head of market strategy at Ebury’s financial services firm.
The news only caused a shrug in the stock market
“We expect changes to be minor and the impact on sterling limited as we believe it is more influenced by ongoing recession concerns and the Bank of England’s monetary policy.”
The stock market also disregarded the political crisis, said Sophie Lund-Yates, an analyst at Hargreaves Lansdown. The big question now is how the new party leadership stands on the tax cuts that have been repeated in recent weeks. Former Finance Minister Sunak has always resisted fearing a further rise in inflation.
A candidate who promises tax cuts should stand a good chance with a conservative party base. However, the chances of this are not great. The country’s debt situation is unsustainable, according to the Fiscal Responsibility Office (OBR), the country’s independent audit office, in its fiscal threat report on Thursday. To reduce debt to 75 percent of gross domestic product, and thus to pre-pandemic levels, “taxes must increase or expenditure must be reduced, or a combination of both.”
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