Boris Johnson’s announcement brings a ‘sigh of relief for UK investors’
(Picture: PA Wire)Sterling rose on news of Boris Johnson’s resignation on Thursday, as business chiefs called for leadership and tax cuts to boost the UK’s faltering economy.
Shortly after Mr Johnson’s resignation bombshell hit dealing screens in the City, the pound was up around half a cent against the dollar at $1.1972 before falling back slightly.
The FTSE 100 index was also trading higher, up 80.58 points at 7188.35.
Walid Koudmani, chief market analyst at financial brokerage XTB, said: “The resignation of Boris Johnson will breathe a sigh of relief for UK investors as it curtails the uncertainty of a government in name only.
“Make no mistake however, the GBP remains severely weak due to the dire state of the UK economy which is underperforming its peers, likely to enter into a recession while the Bank of England refuses to hike interest rates aggressively to deal with the escalating inflation. The new prime minister — whoever that is — has a massive job on their hands.”
The market reaction came as the former head of the CBI called on new Chancellor Nadhim Zahawi to urgently slash taxes to boost investment and support struggling businesses.
Lord Bilimoria, the founder of the beer brand Cobra and ex-president of the Confederation of British Industry, said the world was looking at the UK and wondering what the country was doing.
“We need to cut taxes,” he told the BBC. “We’ve got the highest tax burden in 70 years. It’s absolutely the wrong thing to have at this time, at any time, let alone at a time like this when business needs help, and consumers are really squeezed.
“There has been some help by the previous chancellor. But businesses are not getting any help apart from a little bit of business rates relief. And the whole world is now looking at the UK and saying what is this great country doing and with the political turmoil, the mess that we’re in now with desperate businesses crying out for leadership, crying out for the Government to focus on growth and investment.”
Mr Zahawi was appointed Chancellor following the departure of Rishi Sunak on Tuesday night. Despite supporting Mr Johnson on Wednesday, Mr Zahawi this morning released a letter on social media calling for him to resign.
Before Mr Johnson decided to quit, he had been planning a keynote speech with the Chancellor to announce a new economic strategy which was expected to include tax cuts.
Meanwhile, Britain’s fiscal watchdog warned that soaring energy prices and rocketing inflation threaten to tip the UK into recession, hitting household finances and sending government borrowing ballooning.
