Deutsche Bank analysts point out that as per expectations, Boris Johnson was elected the leader of the Conservative Party yesterday, and as such will become the new UK PM this afternoon.
Key Quotes
“While journals stretching to the moon and back have been written on the Brexit implications, less has been written on the wider economic policy mix of the incoming government. DB’s Oli Harvey wrote on this yesterday and thinks that if the new administration survives or wins an election we could have a sizeable departure from the post 2010 regime.”
“Indications are that Borisnomics may represent a significant relaxing of fiscal policy leading to materially higher borrowing and hence issuance. At the same time, we think there is at least some possibility the Bank of England’s mandate could be adapted to provide the bank more flexibility over inflation. This policy move is likely to be more extreme in a hard Brexit scenario but fiscal policy is likely going to take the strain in all reasonable scenarios.”
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