The UK Leadership Race: The Candidates and What Lies Ahead

The markets will have the final list of candidates in the leadership race, with the 1st ballot scheduled for 13th June.
Bob Mason

Who’s in the Running

Boris Johnson puts the foot on the gas, pledging income tax cuts for higher earners in a bid to woo back ex-Conservative Party voters.

Johnson’s promise of tax cuts comes at a time when there’s also been the talk of Britain refusing to pay the Brexit bill of £39bn.

Johnson had spoken over the weekend, saying that, as the British PM, he would hold onto the £39bn until Britain received better Brexit terms.

Interestingly, Boris Johnson was in the news over an attempted claim that Johnson had lied to the British public in the run-up to the EU Referendum. Johnson had claimed that Britain was paying the EU £350m a week.

The good news for front runner Johnson was that the attempted prosecution was thrown out with limited damage from the media.

While Boris Johnson is the bookie favorite to win the leadership race, a number of other candidates are in the running.

The number has been on the decline. 11 MPs go into today’s decision day on who forms the final list of candidates. The deadline for submission is 1700 BST.

Jeremy Hunt is the 2nd favorite to take the top job, with Andrea Leadsom coming in at 3rd according to the latest odds.

While Boris Johnson is a hard Brexiteer, Jeremy Hunt sits in the “remain camp”. A Jeremy Hunt victory would likely see negotiations extend through to Halloween and deliver even greater uncertainty over what lies ahead.

Andrea Leadsom is a pro-Brexiteer and 3rd in the running, according to the bookies.

Outsiders in the hunt for the top job include Sajid Javid, Michael Gove, Rory Stewart, and Dominic Raab.

From the outsiders, Michael Gove and Dominic Raab voted to leave the EU. Sajid Javid and Rory Stewart voted to remain, though Sajid Javid is now in favor of leaving the EU.

The bookies and Tory MPs both favor front runner Boris Johnson. There’s a divergence from there, however.

In the rankings, based on Tory MP Support, Michael Gove comes in 2nd, with Jeremy Hunt 3rd.

Outsiders are Dominic Raab and Sajid Javid.

What Lies Ahead

The final list of runners in the leadership race will be announced later today.

We can expect the chatter and media bandwagon to get rolling from the get-go. As has been the case in previous leadership races, the race tends to get dirty.

There are already calls for Michael Gove to pull out at the 11th hour.

Following today’s announcement, a number of ballots will whittle the number of candidates to 2.

Members of the Conservative Party then vote to decide the new leader of the Tory Party and British Prime Minister.

For the Pound,

We can expect volatility to return through ballots as candidates get pushed out.

The general view is that MPs will favor pro-Brexiteers over those sitting on the fence or in the “remain camp”.

A hard Brexiteer would likely be the worst outcome for the Pound. Particularly if there’s any talk of just leaving the EU without further negotiations.

While we can expect the Pound to respond to chatter from Parliament, the first ballot on 13th June will have greater influence. The ballot removes the least popular candidate.

The 2nd ballot takes place on 18th June. The ballot removes the bottom 10% of candidates left in the race. While it goes without saying that this will have more influence than the 1st ballot. The outcome will be key, however.

Ballots on 19th and 20th June leave a final 2 candidates. The Pound will likely be particularly sensitive to the results. The main event will then take place on 22nd June. Conservative MPs will vote for the new leader of the Tory Party and British Prime Minister.

At the time of writing, the Pound was down by 0.56%. Moves this morning have come off the back of disappointing economic data and a resurgent Dollar.


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