Brexit: Thursday Afternoon Update

Managing Director
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Posted on June 30, 2016

Story of the Day: Shock as Boris Johnson pulls out of Tory leadership race
What a difference an hour or so makes. Up to this morning it appeared Boris Johnson and Michael Gove would be working hand-in-hand on Johnson’s leadership campaign. In a surprising twist today, Gove released a statement that he has come to the reluctant conclusion that ‘Boris cannot provide the leadership or build the team for the task ahead’ and announced his own leadership ambitions.
This seeming betrayal by Gove appears to have been the final straw for Johnson’s leadership ambition. There were others. Johnson had never seriously been a Brexiter. It is increasingly clear his strategy was to lead the campaign, lose the campaign but then be seen by the Tory party as a serious leader in the lead up to Prime Minister Cameron’s 2019 resignation. Additionally, Teresa May’s statement of intent to seek the leadership was pointed in its rebuke of Johnson, and her composed, business-like press conference seeking to unite the country and the Conservative Party was one of the day’s highlights.
Conservative Party Leadership
The five official candidates are Theresa May, Michael Gove, Dr Liam Fox, Stephen Crabb, and Andrea Leadsome. As there are more than two candidates, all five will proceed to the ballot of the Conservative Parliamentary Party next Tuesday.
Ms. May is currently considered the favourite in the leadership race and would become the UK’s second female Prime Minister. Michael Gove is stiff competition, although he has previously made comments, including ‘I could not do the job’ that may prove difficult to overcome. One unknown is where Boris Johnson’s votes will go. To the traitor Gove or to May. Both are strong candidates with long Ministerial careers already under their belts.
Labour Party
Following Tuesday’s vote of no confidence, Jeremy Corbyn appears to be keeping calm and carrying on as leader of the Labour Party amid a chorus of calls for his resignation. Some argue too calm, in the face of an increasingly bitter dispute. At a launch today outlining a Labour report on anti-Semitism, a Corbyn supporter verbally attacked Jewish Labour MP Ruth Smeeth. Ms. Smeeth left in tears while Corbyn and Labour leadership stood idly by, failing to intervene. Two other Labour MPs have received death threats from Corbyn supporters because of their resignations from the shadow cabinet. Never to be taken lightly, death threats are even more heinous since the murder of Labour MP Jo Cox two weeks ago.
While resignations continue within the ranks of the Parliamentary Labour Caucus, Tom Watson, Corbyn’s deputy has ruled himself out of any leadership campaign, while Angela Eagle has not yet officially confirmed that she has put her name forward.
European Union
Former German Chancellor and architect of German reunification Helmut Kohl has warned the EU that slamming the door on the UK would be a giant mistake. Kohl, a mentor of Chancellor Angela Merkel, continues to hold sway.
EU membership talks with Turkey resume today. Turkey’s potential membership in the EU was an important and controversial issue throughout the UK’s referendum. Today’s meeting focused on economic and financial provisions of membership.
The Markets
Mark Carney, Governor of the Bank of England, said today that the Bank of England is considering cutting interest rates. A lively afternoon on the FTSE 100 with a sharp increase finishing the day up over 2%, above its level one week ago although the day was volatile.

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