Boris Johnson Announced To Execute Brexit In His First 100-days If He comes To Power

Boris Johnson, a widely famous contender for the UK's next prime minister position. Recently, he commented that, if he comes to power as prime minister, he will deliver Brexit in his first 100-days. Also, he is planning to form a "War Committee" to get the UK out of the EU bloc by October 31, this year deadline. As per some of the media sources, the War Committee would include a small number of senior minister and Brexiteers advisers.

One spoke person of Mr Johnson's team commented that Johnson and his team are rigorously concentrating on the work at hand and propagating Johnson's vision for the UK divorce to be delivered by October 31 with or without any formal deal.

In an interview, Mr Johnson also pointed about the work he has delivered on his promises as Mayor of the London city in the year 2012. Meanwhile, Mr Johnson also praised United States president Donald Trump and indicated many of his good qualities and commented that if he comes to power his government will also copy some of the Trump's policies in the UK. The ex-mayor of the London city also praised Donald Trump's achievement, including the performance of the United States economy. He also emphasised that his conservative party should pay respect to the US president reliance on free market economies. He added that Trump has many good qualities that we should adopt in the UK as well.

The ex-mayor commented that “We Tories, which I believe for long have not able to talk up the agenda of free-market economics and we are not able to be positive about this. And, I am also aware of the fact that many people will not agree with everything Donald Trump says and does but now he has results, and we should pay respect to that, he added”.

Recently, in an interview, Unites States President Donald Trump praised Johnson and called him the right candidate for the next Tory leader and a good choice for the next Prime Minister candidate. He also added that I think Boris would deliver an outstanding job.

However, in another interview, Johnson’s rival Jeremy Hunt claimed that he would be ready to take out Britain from the EU bloc without a deal.

The International Trade Secretary, Liam Fox, who is supporting Jeremy Hunt in the leadership race, commented that the Northern Ireland backstop with a time limit would be a way to take the Brexit deal through the House of Commons. He said that time limit is the key element which is hurdling the Brexit deal to go through the British Parliament. He also added that he is a suitable candidate to deliver Brexit.

In an interview, Mr Jeremy Hunt also laid down his plans regarding reduction in corporate tax that could stimulate growth in the UK’s economy and bring money into the market and could boost spending. Alike, Johnson, Hunt also mentioned that he would use financial headroom in the Treasury to stimulate spending and streamline the investment cycle.

The ongoing spectacle could dent stock indices performance in the second half of 2019.

Since the date of referendum ( an election in which everyone of voting age were allowed to take part – was conducted on June 23, 2016), took place to decide whether Britain should crash out or remain in the European Union bloc, the broader indices has not surged as much as its peer indices have moved. In absolute terms, since the date of announcement, the FTSE 100 index has risen approximately 15.4%, whereas its peer indices like the Dow Jones Industrial Average Index have delivered a price return of approximately 54.38% and the broader index of the United States S&P 500 has delivered a price return of approximately 40%, which indicates clearly, how did Brexit turmoil have dented the return in the past.

The ongoing uncertainties over Brexit could further dent the performance of the market indices in the UK in the second half of 2019. As, many are claiming that they can execute Brexit on October 31, 2019, with or without any deal would further going to jolt the investors' sentiment. Because, as many economists including Governor of the Bank of England, Mark Carney earlier warned that a no-deal Brexit could be a disaster for the British economy. He has also mentioned that a no-deal Brexit could push the UK's economy into recession and could have substantial impacts on the global economy. Also, this could devalue sterling pound against the US Dollar significantly. And, plunge in pound value could be a serious risk for the companies, who have a major operation in the UK and those who don't have a globally diversified revenue model. Also, it could inflate import bills of the UK, and inflation could go far beyond the threshold limit of 2%.

Sterling Pound Performance since the referendum

Daily price chart (as on July 01, 2019), before the market close. (Source: Thomson Reuters).

On the date of referendum results were announced, currency pair GBP/USD was quoting at 1.4878 and plunged to 1.3218 within three days of announcement. In absolute terms, Pound has depreciated approximately 15 per cent since the date of results of the referendum were out. On a YoY basis, the pound has devalued by approximately 5 per cent, and on a year-to-date basis, the pound was down by 0.82 per cent against the US dollar. The volatility, as mentioned above was primarily because of Brexit related uncertainties, and if the same going to repeat in the coming days, it could further devalue sterling against the US dollar or other major currencies. Devaluing currency could increase chances of recession or slowdown in the investments, as many experts have already warned. And, this could hit the job market adversely as well.

At the time of writing (as on July 01, 2019, at 12:45 PM GMT), currency pair GBP/USD was quoting at 1.2642 and declined marginally against the previous day closing price. In the year-ago period, the pair has registered a 52w high of 1.3385 and a 52w low of 1.2438.

A no-deal Brexit could drag the UK economy into recession, and that could be a potentially significant threat for the investor. As we have observed that, despite valuation are cheaper of the UK stocks, sterling has fallen substantially, and stocks are offering decent yield, global investors are not pouring their money into the London Stock Exchange-listed securities. They have taken a wait and watch stance, monitoring the political and macro events in the UK market closely.

As widely criticised “no-deal” Brexit again posing risks to the investors, as Boris Johnson consistently insisting that if he comes to power, he will execute Brexit in his first 100-days, with or without any deal. However, EU negotiators have already cleared their stance that, they are not going to reopen Brexit talks and what was negotiated with the ex-Prime Minister Theresa May would stay firm.

Potential Impacts of a no-deal Brexit.

In case of a no-deal Brexit, all ties of the UK with the European Union will end with immediate effect and without any transition period. Also, it does not assure the right of residence to the citizens, which could create a number of disruptions in the near terms and could impose border checks on their cargos. It would hurt the supply chain of the many companies, and that could disrupt their operations in the short-term and could shoot-up their operating expenses significantly. Post a no-deal Brexit, and the UK would no longer have access to the Single Market of the European Union.

Reasons behind Brexit

As many mentioned, the EU has imposed too many rules, and regulation on the business and the UK is paying billions of pounds every year as membership fee and gaining little against it. The UK lawmakers also wanted to set their own laws and rules rather than implementing the consensus laws decided by the EU member countries. Another crucial reason why people are supporting is the Immigration problem. Pro-Brexiteers want complete control on its borders, and they want to reduce down the number of people coming in the UK to live or to work as Free Movement is the spirit of the EU nations, which allow citizens of the EU member countries to move freely across the EU, without any visa.

However, big corporations are in support of the UK staying in the EU bloc, as it facilitates them to move money, people and products freely around the bloc. Previously, we have witnessed that, many big businesses have relocated their headquarters in the wake of Brexit, and many started their contingency planning to coup up with a no-deal Brexit like scenario. However, time and again, they have raised voices against the no-deal Brexit and warned that the consequences of this move could be substantial.