Thursday, 30th June:. The Political situation in the UK since the EU referendum result is enough to make a TV series, if only House of Cards hadn’t already been written. We have already heard that David Cameron is due to step down; it would be easier to name those who haven’t resigned from the shadow cabinet, whilst Corbyn has lost the confidence of 172 MPs and has been called to stand down as Labour leader. Today, Boris Johnson, the former Mayor of London and who was thought to be favourite to replace David Cameron, announced he would not be standing for leader of the Conservative Party. It comes after Michael Gove made a surprise announcement that he would stand for the leadership, claiming he had come to “the conclusion that Boris cannot provide the leadership or build the team for the task ahead”, this after also claiming he “wanted to help build a team behind Boris Johnson so that a politicians who argued for leaving the European Union could lead us to a better future”. Instead British Justice Secretary Michael Gove and Home Secretary Theresa May will lead the five-way race to be the next Conservative Party leader. The winner is set to be announced on 9th September.
The UK’s GDP is estimated to have increase by 0.4% in the first quarter of 2016, according to latest data released by the Office for National Statistics (ONS). Between the first quarter of 2015 and the same period in 2016 the economy has grown by 2.0%. Both of these figures are in line with previous estimates, but represents slower economic growth than the average growth rate of 0.6%.
In the last half hour of European trading the Bank of England governor Mark Carney advised that some easing of monetary policy is set to come over the summer as a result of the deteriorated economic outlook in the UK. An initial assessment of the situation will be made in July ahead of their inflation report in August where they will also discuss the “further range of instruments at our disposal”. UK economic growth had most recently been slowed to 2% (in May) due to the uncertainty surrounding the EU referendum and Carney today repeated that the BoE would provide more than £250bn of additional funds to support financial markets, should it be necessary.
The FTSE 100 gathered strength on the back of Carney’s comments and after opening negatively the index ended the day +2.27%, ending the month with more than 4% gains. The FTSE 250 ended with another day of gains as it makes a recovery following its biggest lost since Black Monday. It closed the day +1.68%, ending the month more than 4% lower (it was c.12% lower month to date at the close on Monday). However, sterling took a blow, as it fell further against both the euro and the dollar. At the time of writing GBP/EUR is €1.19 whilst GBP/USD is $1.33.