Showing posts with label Boris Johnson. Show all posts
Showing posts with label Boris Johnson. Show all posts

Monday, 27 June 2016

Political bamboozling is leaving the market confused

As the fallout over Brexit continues the British Pound fell to its lowest rate in over 31 years highlighting the extent of fear lurking in world markets at present. Politicians have come out in their droves after a weekend of crisis talks in an attempt to pour cold water on speculation that the UK leaving the EU would cause shockwaves for years to come while others warned the stability of the British economy has been compromised because of the vote.

Chancellor of Exchequer George Osborne failed to convince market participants of certainty going forward stressing the point that the "new"government to be announced after the Conservative Party conference will need to find ways of protecting the fiscal shape of the UK's budget policy.

There were also rumours afloat that Osborne was considering his political position at this current time knowing fully well that his administration of government's crucial ministry's affords him a large degree of political credibility should he wish to pursue the position of prime minister, something his remained tight lipped about.

Yet the political infighting isn't immune to the Tories only with the Labour Party using the event as an attempt to oust recently installed leader Jeremy Corbyn who's been in the firing line from members of his own party for not being vocal enough in his campaign for the "Remain" camp. A number of Labour MP's have resigned their position in an effort to shore up support against Corbyn.

One would've thought the Labour Party would've use the vulnerability of the Conservative's as a platform to work towards in eroding the strength of the ruling party however top leadership has left a lot to be desired.    
The fate of Bank of England governor Mark Carney now hangs in the balance as critics have taken a swing at his ability to manage the financial system by saying his commentary during the build up of the referendum was largely skewed in favour of "Remain"putting him at odds with situation that's turn itself on its head.

A campaign to rid the Bank of its governor is placing additional risk into the equation making it difficult for any market participant to find any type of optimism in the midst of chaos.

And who can forget the frontrunner to become the next prime minister of Britain Boris Johnson who's been singing like a canary bird in his response to questions about the manner in which he envisions the process of Brexit unfolding in the coming years as well as the type of policy needed to make the market feel certain of a stronger Britain again.

When asked about his concern about the current market volatility over the saga Johnson shrugged off any concern saying he felt the markets were pretty calm by his account, an ignorant and worrisome statement to make in the face of danger.

He went on to say that he would strive for the free trade agreement between the UK and EU to remain but said the free movement of labour would certainly become restricted to protect British jobs. If anyone wanted some sort of clue to the direction the UK could be headed in they would do well following Mr Johnson's comments closely.

In saying this it cannot be said enough that the current political whirlwind throwing the British economy into disarray has direct influence from the very policymakers who tried desperately to twist the arm of the electorate into believing whatever propaganda they thought would've appealed to them. The vote day is over, the results are in yet the politicians haven't the slightest idea on the next plan of action.

It seems as if the majority of British politicians aren't satisfied with the way polling has gone leading many to believe their could be a plot twist to a dramatic political play. What will it be?

We aren't certain of it yet which stokes the fires of fear even more at a time when politicians should be concentrated on finding a long term solution that doesn't hinder the outlook of the economy.  
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Friday, 24 June 2016

Brexit; What's the state of play right now?

One of the crucial lessons you'll ever learn when participating in financial markets is complacency is often caught on the wrong side of expectation. This is what many woke up to find this morning after the British public elected to leave the EU sending shockwaves throughout world markets who up until yesterday believed the "Remain" camp had done enough to secure a victory.

I'll be the first to admit that my intuition told me the possibilities of the UK leaving the EU was largely unlikely but I do believe that my opinion wasn't far off from the markets expectation in the midst of a global selloff felt today.

If financial market participants believed that they fully understood the psyche of the British voter or even that of a European voter this morning's shock decision has reminded them they're very wrong. It's as if there's a disconnect between what politicians in the EU are saying and what's really happening on the ground with the latter proving more serious in their convictions than the former.  
Where to from here?

David Cameron's campaign to convince the British public of staying with the EU has irrevocably failed along with his reputation to lead the country forward forcing him to make a decision to step down from his role as prime minister that'll happen in October with no mentions of who might take over. The obvious candidate would be the current chancellor of exchequer George Osborne however this won't be a firm certainty with the Conservative Party reeling from split lines in support of Cameron's campaign.

One critic that stood out boldly was former Mayor of London Boris Johnson who added weight to the "Leave"camp that's successfully resulted in the desired outcome for their campaign but not without longer term implications for UK's leading political party.

Cameron's decision to stay on until the Conservative Party Conference was strategically link with saving the image of the party who did itself no favours holding such a vote that's ended up dividing the party instead of uniting it. It could also suggest that Osborne might not fancy himself sitting in Number 10 lamenting the defeat whilst preparing the UK for life after the EU considering he strongly favoured "Remain".

This all but guarantees Boris Johnson an open door to take over as prime minister should he want to which would be confirmed in his own decision to stand down as Mayor of London to concentrate his attention of campaigning for the "Leave" vote that's given him incredible momentum to snatch up Britain's highest political position.

But it won't be without its own problems with the party divided, the prospects of the future uncertain and the opposition rearing to take full advantage of the vulnerable state of the ruling party's woes.

Reconsidering Investment

Businesses in the UK will definitely be reconsidering their geographical location now that all ties between Britain and the EU are to be severed. The district served as an entry into Europe together with the benefit of operating in Pounds rather than Euros, producing a currency advantage if the Pound was weak.

They've come to rely on a significant amount of demand stemming from the EU region that'll now be subject to tighter border controls, import tariffs as well as delays in delivery all making matters complicated when they should be easier.

Needless to say the British public have come to recognise the grave risks becoming apparent in the EU with issues such as Greece austerity not being properly addressed, the Syrian refugee crisis benignly out of control and an insurgence of ISIS terrorism threatening to national safety.

Possibly the biggest risk of the Britain staying was the implosion of the Eurozone which seems to be drawing closer with every fresh unattended economic calamity. You could say perhaps Britons have voted to shield themselves from an inevitable crash when it does occur, a view that's not distant but possibly a huge risk to bank on given the importance of it's relevance and relations with the EU.  
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