So, the latest chapter in the Brexit story opens with another new conservative PM.
The fact that it is Boris Johnson has come as little surprise. Erstwhile Telegraph journalist and editor of The Spectator, and ex-Mayor of London, he has played an increasingly prominent role in the party in recent years. Back in 2016, as Britain was grappling with whether or not to leave the European Union, Johnson stated his position as being on the Leave side. “If we can’t get the reform we need, Britain has a great, great future elsewhere and outside in a different relationship”.
But what are his real policies now that he has the key to Number 10?
Brexit – hard or negotiated, but definitely on schedule
On June 12, 2019, Johnson launched his campaign to lead the Tory party and stated that after two missed deadlines and three years, Britain must finally leave the EU by October 31, 2019.
However, it is still far from clear what shape Brexit will finally be delivered.
Mr Johnson – still ‘Boris’ to detractors and supporters alike – has made it clear that he does not want a no-deal Brexit. He has suggested that warnings about the economic consequences of crashing out of the EU were “scaremongering” and “wildly exaggerated”. But he has said he will try to get a deal agreed, because it is overwhelmingly in the economic interest of both the EU and the UK to do so.
His hardline approach may be a ploy to provide leverage at the negotiating table, where he has pledged to ”stare into the eyes” of EU negotiators. His experience in international relations is such that he will appreciate that the economies of Germany, France and the rest of the EU may have more to lose than the UK.
But if it is a bluff, he must be fully aware that it could be called. The EU might not be persuaded, and in the UK opponents of a no-deal Brexit – which would see the UK leave the EU single market and customs union overnight – say it would cause massive economic damage. There may be sufficient MPs on both sides of the house opposed to a no-deal Brexit who would block it.
Our new PM has already announced that he would consider by-passing parliament altogether if he cannot get support – although any attempt to suspend Parliament to force through a no-deal Brexit is likely to end up in the Supreme Court, says senior Tory MP Sir Oliver Letwin.
Is he the man for the job?
The Tory Party is still divided. The new Prime Minister will barely have the votes in Parliament to guarantee safe passage for any deal he makes – but despite a carefully curated image as a bumbling figure with a history of gaffes and indiscretions, he has impressive credentials. As the Mayor of London, he presided over the 2012 Olympics, which provided a significant boost to the economy with a £9.9 billion boost in trade and investment. His eight years of tenure saw murder rates in London fall – as well as the return of the Routemaster bus, and the introduction of hire cycles or “Boris bikes.”
What should you do?
A no-deal is certainly a possibility, but if a hard Brexit does happen under the new PM, it may not be a financial disaster for UK investors.
U.K. equities might be little moved by a no deal as markets may have already priced it in, and there could be some new opportunities for active investors. European stocks could suffer more with the loss of a key market.
Perhaps the best solution is to call on us at Continuum and make use of our investment expertise. We can help you to spread your holdings and create a diversified portfolio, whatever direction our new Prime Minister takes us in.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.