The impact of May’s resignation on the UK economy

Following Theresa May’s resignation speech on 24th May, before the start of the bank holiday weekend, the Conservative Party leadership contest sprang into action.

When the candidates have been whittled down to just two, the final say on who will become the new Conservative Party leader and prime minister will be down to Conservative Party members (you must have been a Conservative Party member for three months to have voting rights). The winner of the Conservative Party leadership race will need to find a solution that speaks to all, in a currently polarised party. Possibly one of the toughest challenges they will face is to win the confidence of the House of Commons where the majority are opposed to a no-deal Brexit.

Boris Johnson, who is the favourite to succeed Mrs May, recently wrote in his Daily Telegraph column that “No one sensible would aim exclusively for a no-deal outcome. No one responsible would take no-deal off the table.”

The increased risk of a no-deal Brexit has posed potentially grave implications for the UK economy. Azad Zangana, Senior European Economist and Strategist at Schroders, stated late last week that, “If this were to happen, we would anticipate the economy to slow and fall into recession around the turn of the year.”

Jeremy Corbyn, leader of the Labour Party, is quoted as saying that whoever becomes the new prime minister should call a general election to, “let the people decide our country’s future”.

Mrs May will continue in the role until the new prime minister is elected. At the time of writing, the predictions are that sterling is likely to remain volatile and subject to downside risks as the future of Brexit’s direction is debated. It remains to be seen exactly how the future of the leadership contest, and the extent of the implications on the UK economy, will play out over the coming months.

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Sources:
https://www.schroders.com/en/uk/tp/economics2/economics/may-resignation-raises-uk-recession-risk/
https://www.ipe.com/brexit/brexit-uk-recession-warning-as-prime-minister-quits-party-leadership/www.ipe.com/brexit/brexit-uk-recession-warning-as-prime-minister-quits-party-leadership/10031347.fullarticle
https://www.bbc.co.uk/news/uk-politics-48411784
https://www.bbc.co.uk/news/uk-politics-48399201