Spirits lifted as Johnson steps down

After a dramatic few days in Westminster, the resignation this morning of Boris Johnson saw the pound lift against the dollar and the FTSE 100 shift into positive territory. Volatility remains for now, however, as a new leader is sought, and British politics enter yet another new period of uncertainty.

"The clash of political camps and the row over whether the Prime Minister should stay or go is over,” said senior investment and markets analyst at Hargreaves Lansdown, Susannah Streeter. “With the mood music changing so abruptly in Westminster and Boris Johnson finally deciding to leave 10 Downing Street, the pound lifted against the dollar, heading back up to $1.20 before dipping back slightly. With the rollcall of resignations now being updated by the minute, and his newly appointed Chancellor of the Exchequer even calling for him to go, his position looked untenable.

“The pound’s wavering path indicates that that traders believe it’s not quite the end to the political stalemate. Mr Johnson is set to stay in position until the Autumn, and the battle is already commencing over who will be the next leader. There is a cacophony of problems on the next Prime Minister’s plate, not least the cost-of-living crisis causing voters so much financial pain. Plus the trading relationship with the EU is still fraught with difficulty given the bill to amend the Northern Ireland protocol. Mooted tax cuts by the new chancellor may be popular with the electorate but risk making the Bank of England’s task of trying to bring down demand and inflation by raising rates even trickier.”

Growing the economy again should now be the main focus, business group the CBI said. Commenting on Johnson’s resignation, director-general of the group, Tony Danker said he looked forward to a better and brighter economic future.

“The Prime Minister backed UK business throughout COVID and has been steadfast in his support for Ukraine. He will leave office with our best wishes.

“But we now need the political vacuum to be filled at speed to protect people’s living standards, through action on business confidence, investment and growth. Getting the economy growing again has got to be the number one focus for all politicians, and I look forward to working with the government on a plan for a better, brighter economic future for people right across the United Kingdom.”

In his latest piece for CIR Magazine, Chairman of the Institute of Risk Management, Stephen Sidebottom, writes that the behaviour of those in authority shapes the behaviour and culture of others; and explores this in the context of risk management.

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