The last few days have been some of the most turbulent and chaotic in recent British political history and have included the downfall of the Boris Johnson government. The immediate effect on domestic markets seems to have been marginally positive, though there is debate this could have been driven by a number of external factors – certainly, there has not been the same effect as seen on 13th December 2019 when markets rallied strongly the morning after the general election when the Conservatives stormed to an 80-seat majority. The pound has slightly risen against the dollar since Tuesday, though again, this could be down to a multitude of factors – and indeed, it has actually fallen around 11% year-to-date. If there is one thing investment markets like though, it is clarity, and there is a no doubt a swift resolution to the current crisis will be better than a drawn-out one.
The end of Boris Johnson arguably began with the ‘Partygate’ scandal in December 2021 and continued with a steady stream of revelations culminating in Johnson being served with a fixed penalty notice (the first sitting PM to have been sanctioned for breaking the law). After a vote of no confidence by Conservative MPs was held on 6th June 2022, Johnson narrowly won by 59% to 41% - and with the Chris Pincher scandal breaking on 30th June, this proved to be the final straw for many in his government. What followed was a tsunami of resignations (62 out of 179 government ministers, Parliamentary Private Secretaries, and trade envoys), and Johnson was forced to resign on 7th July 2022.
The Conservatives are reportedly keen to kick off the leadership contest as soon as possible and whittle the field down to the final two by the end of July. Timescales at the time of writing are currently up in the air, though broadly speaking each candidate must gain the backing of 8 MPs initially before rounds of voting proceed between Conservative MPs, with one candidate being eliminated each time until two remain. Finally, a vote is put to the wider members of the Conservative Party (roughly 200,000 people), and it is only after the result of this is known that the victor and new leader of the conservative party is known.
Boris himself became leader in July 2019 after beating Jeremy Hunt by 66.4% vs 33.6% through this process. The Conservative Party Conference will be held in Birmingham in three months, from 2nd October to 5th October, with the presently touted timescales indicating that the new leader will be announced at, or around the time of, this event.