It took less than a week for sterling’s significant gains to be wiped out on the currency markets.
After Boris Johnson took the keys to Number 10 with a resounding victory most people hailed a new era of certainty under his administration.
No more hung parliaments, embarrassing Commons defeats and cliff-edge Brexit moments now the Tories have a 78 seat buffer to play with.
The reality couldn’t be further from the truth.
Pound completes a round trip
Earlier this week the pound completed a round trip having momentarily spiked in the wake of the general election.
The tumble had been prompted by government plans to rule out any extension to the transition period beyond the end of next year, bringing the prospect of a no deal back into play, completely unnecessarily.
Neil Wilson, city analyst at Markets.com, said: “I must confess to believing he wouldn’t need to be so drastic, that a large majority offered the flexibility yet strength a government craves in deal-making.
“This sets up another cliff-edge and could create yet more months of uncertainty for investors just when we thought all was squared away.”
More to come
Yet the Brexit Bill is likely to be just the start of an uncertain administration propped up by a very certain majority.
Johnson has a new crop of blood-thirsty Brexiteers on his side now, and they will all be out to deliver on the divorce at all costs.
We also must not forget that the election took place against the background of an economy that has seen weak investment and stagnating productivity and wages.
Wages for median workers are still below 2007 levels, and the government’s own impact assessments of the Brexit deal give little hope that an economic revival is in the offing.
Impact assessment
According to independent trade experts Johnson’s Brexit plan would reduce the UK economy by almost 2 per cent.
Even if mitigating trade deals with the US, Australia and New Zealand were somehow agreed at the same time as writing a Brussels deal, the Conservative Party leader’s withdrawal plans would still see UK output decline by 1.4 per cent.
The devastating downturn would further wreck a UK economy that according to official ONS figures this month is suffering its worst performance in over a decade.
All just months after the country was one negative quarter away from a recession.
We’re not out of the woods yet. Far from it.
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