Johnson resigns leaving UK economy facing an uncertain period
- Azad Zangana and Stephen Mann
- 07 July 2022
- 5 mins reading time
Boris Johnson has resigned as UK Prime Minister, triggering a leadership contest for the Conservative Party and premiership that is unlikely to be settled before the autumn. This leaves a lengthy period of uncertainty over the direction of the country and economy.
Johnson’s government will always be remembered for Brexit and often leaned towards populist economic policies. These policies may have boosted short-term economic growth but also contributed to higher inflation and higher government borrowing.
The resignation of Chancellor of the Exchequer Rishi Sunak on Tuesday 5 July highlighted the disagreement between the Treasury and the prime minister’s office. The suggestion was that voters were not being given the full picture when it came to the state of the economy and public finances.
Looking ahead, the outlook hinges on who Johnson’s replacement will be. A return to traditional Conservative politics will probably bring about some economic austerity in the next few years, but also a return to business friendly policies. However, another populist politician could lead to a continuation of Johnson’s economic approach.
In terms of the reaction in markets, initial news of the resignation helped lift sterling against most other currencies, though these moves have been relatively small.
Regarding the impact of this resignation on Schroders Personal Wealth (SPW) portfolios, we should note that these are invested globally with limited UK equity holdings. For example, only 14.1% of our Balanced Profile in May 2022 was in UK equities.
The political situation is evolving by the hour. We are monitoring developments and will keep you updated.
Azad Zangana is Senior European Economist and Strategist at Schroders. Stephen Mann is Head of Investment Specialists at Schroders Personal Wealth.
Any views expressed are our in-house views as at the time of publishing.
This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.
Fees and charges apply at Schroders Personal Wealth.
In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.
Let's start with a free initial consultation
We'll begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.