UK: The PM's Resignation – Limited Economic Impact, but Broader Uncertainty on Economic and Fiscal Policy
In DBRS Morningstar’s view, the resignation of British Prime Minister Boris Johnson is unlikely to have material economic effects in the near term, but brings broader uncertainty over longer term economic policy. The Prime Minister resigned on 7 July 2022 amid a political crisis following the resignation of senior members of the cabinet.Key Highlights
• In DBRS Morningstar's view, economic and fiscal policy measures are on pause, but only temporarily, as the leadership contest takes place.
• A new PM could change the direction of economic and fiscal policy, with potential implications for the outlook. But we still expect a broadly prudent fiscal policy in the longer term.
• Political challenges related to the Northern Ireland Protocol and Scottish referendum on independence are likely to persist under any new leadership.
“Although there is uncertainty over who the next Prime Minister will be and whether or not there will be any change in the direction of economic and fiscal policy, we think this uncertainty will be short-lived”, said Adriana Alvarado, Senior Vice President in the Global Sovereign Ratings Group. “We still expect that in the longer term, fiscal policy will follow a broadly prudent path”.
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Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
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