WATCH UK Prime Minister Boris Johnson in crisis as key ministers resign

Britain’s Prime Minister Boris Johnson meets New Zealand Prime Minister Jacinda Ardern (not pictured) in Downing Street, London, Britain July 1, 2022. REUTERS/John Sibley/Pool

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LONDON, July 5 (Reuters) – Britain’s finance and health ministers resigned on Tuesday in what appeared to be the final blow for Prime Minister Boris Johnson’s premiership after he tried to apologize for the latest scandal targeting his administration. Read more

FINANCIAL MARKET REACTION:

PHILIP SHAW, CHIEF ECONOMIST, INVESTEC

“It’s getting harder and harder for the Prime Minister to hold on. It’s kind of like what happened to Theresa May when Boris Johnson and David Davis quit quite close together because of Brexit.

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“The first knee-jerk reaction would be… to sell the currency. However, the UK is obviously not the only economy in a precarious or fragile position. One could argue that the UK will take a less confrontational approach to the EU negotiations, which could reduce the perceived threat of a trade war or trade actions.”

KENNETH BRUX, FX STRATEGIST AT SOCIETE GENERALE

“It brings the crisis within the cabinet to a head. It means it’s hard for Prime Minister Johnson to hang on.

“The Pound and Euro have already had a bad day in the office and we may see a little more reaction tomorrow. The implications for the Pound and UK assets are more about the macroeconomic backdrop such as the BoE and the changing outlook. inflation and this should not exaggerate the downward pressure on sterling and UK assets.”

DAVID OWEN, CHIEF ECONOMIST AT SALTMARSH ECONOMICS

“Over three months, this could be positive for UK assets as we may get more fiscal easing in the fall. This could clear the air and bring a more stable backdrop. But in the short term, it depends on the backdrop. Politics.”

JORDAN ROCHESTER, FX STRATEGIST AT NOMURA

“When your Chancellor and your Health Secretary resign, it is only a matter of time before a Prime Minister is absent.

“The new leader will want to win over voters and the Tory party – so maybe we’ll see energy tax subsidies and tax cuts to win over loyal Tories.

“But first you need a real winner of a leadership contest, it can take about six to eight weeks or so…then after that we wait for the decisions of a new chancellor.

“The irony is that if Boris is not planning to step down today or tomorrow, we will have to find out who the interim chancellor is!

“So the upside risk is that Boris stays and we have a much less economically frugal replacement for Sunak. It’s not impossible.”

VIRAJ PATEL, MACRO STRATEGY AT VANDA, ON TWITTER

“Buy $GBP…end Boris Tory’s government? Or sell $GBP…because the chancellor knows something we don’t. questions.”

BIPAN RAI, FX STRATEGIST AT CIBC CAPITAL MARKETS

“Even if Sunak and Javid had stayed in power, I don’t know if that would solve anything that really had to do with the underlying problem with the UK economy as a whole, which was that it was taking a cost from the life crisis.

“At the same time, the Bank of England is really dragging its feet on policy tightening compared to the rest of the world.

“So the fact that we had two significant resignations is very important from a political point of view.

“I’m just not sure that really matters for the pound at this point. From a monetary policy perspective, it’s still quite a bearish story for the pound.”

POLITICAL REACTION

KEIR STARMER, LEADER OF THE OPPOSITION LABOR PARTY

“After all the shenanigans, scandals and failures, it is clear that this government is collapsing.

“Tory ministers have always known who this prime minister is.

“They have been his cheerleaders throughout this sad saga: supporting him when he broke the law, supporting him when he repeatedly lied and supporting him when he mocked the sacrifices of the British people.

“In doing so, they were complicit every step of the way as he dishonored his office and failed his country.

“If they had any integrity, they would have left months ago.”

NICOLA STURGEON, FIRST MINISTER OF SCOTLAND AND LEADER OF THE SNP

“Looks like the end could be near for Johnson – not a moment too soon.

“It should be noted though that the resigning ministers were only willing to leave when they had been lied to – they defended it by lying to the public. Everyone rotten must go. And Scotland needs the permanent alternative to independence.”

ED DAVEY, LEADER OF THE LIBERAL DEMOCRATS

“A house of cards built on lies and deceit is collapsing. Go now. You have discredited our great country long enough.”

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Reports from the London and New York Markets Teams and the UK Office Compiled by Paul Sandle Edited by William Schomberg

Our standards: The Thomson Reuters Trust Principles.

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