The British government, particularly its financial sector, is hounded by a chain of threats after exiting the European bloc at the end of January. The finance minister’s subtle resignation is the latest addition to the British market’s compounding problems.
Exchequer Chancellor Sajid Javid resigned on Thursday, with British Prime Minister Boris Johnson appointing Rishi Sunak as the new chancellor. This development gives the markets a hazy view of the government’s stance of keeping its fiscal rules which require striking a balance between its day-to-day spending and revenue within three years.
“The market reaction of gilts selling off, a steeper rates curve and a stronger sterling clearly indicate that expectations are increasing for fiscal-stimulus announcements,” said Union Bancaire Privee portfolio manager Mohammed Kazmi.
Sunak, the new finance minister, may provide some cushion to the U.K. markets by laying down a more united policy platform as observed by analysts Nick Burchett.
But the gravest threat hounding the British financial markets today is to lose its access to former friend E.U. markets when the Brexit transition period expires.