SINGAPORE (July 29): New UK Prime Minister Boris Johnson has overhauled the Cabinet on the same day he officially took over from predecessor Theresa May. Fifteen of May’s senior ministers were fired or resigned. Those who have left include Jeremy Hunt, who was until Tuesday the foreign secretary, and who was running against Johnson to be the leader of the Conservative Party.
Johnson, the former London mayor and chief Brexiteer, has filled his Cabinet with similar hardliners. His chief adviser is Dominic Cummings, who directed the 2016 referendum campaign for Britain to leave the European Union, and who was found in contempt of Parliament earlier this year after failing to appear before MPs investigating false news.
The UK’s new foreign secretary is Dominic Raad, who had called for Parliament to be suspended and a “no-deal” Brexit. Sajid Javid, who succeeds Phillip Hammond as chancellor, is a former
“Remainer”. Gavin Williamson, who was defence secretary in May’s Cabinet until he was fired under suspicion of leaking security secrets, will be education secretary.
Johnson has to craft an exit deal that is agreeable to both Parliament and the EU, and will cause the least economic disruption — all of which his predecessor May had found impossible to do. Observers have noted that he appears to be gearing up for a no-deal Brexit, even though even more Tory backbencher MPs are threatening to block such a deal.
In his first speech as prime minister, on the steps of No 10 Downing Street on July 24, Johnson promised “a better deal that will maximise the opportunities of Brexit while allowing us to develop a new and exciting partnership with the rest of Europe, based on free trade and mutual support.
“We are going to fulfil the repeated promises of Parliament to the people and come out of the EU on Oct 31, no ifs or buts. I have every confidence that in 99 days’ time we will have cracked it,” he said.
Further, the UK would need to “prepare for the remote possibility that Brussels refuses any further to negotiate, and we are forced to come out with no deal, not because we want that outcome”. According to a poll by Reuters, the odds of a no-deal exit stands at 30%.
“Whatever deal we do, we will prepare this autumn for an economic package to boost British business and to lengthen this country’s lead as the number one destination in this continent for overseas investment,” Johnson added.
He also said that in the event of a no-deal Brexit, “we will have the extra lubrication of the £39 billion ($66.4 billion)”. The amount refers to the so-called divorce bill that represents the UK’s outstanding liabilities to the EU, which would be paid over a number of years, according to the withdrawal agreement that May had negotiated. However, even as Johnson threatens to withhold the payment, legal experts have pointed out the UK remains liable for it under international law.
The markets’ reaction to Johnson’s appointment has been muted; analysts say his taking over had been widely anticipated and priced in. However, as his appointment increases the risks of Brexit that would be economically disruptive, market watchers see the UK’s near-term growth opportunities, and its currency, weakening.
“The ambiguity for the UK is likely to continue long into the future as the trading relationship [with the EU] is negotiated,” says Jason Borbora-Sheen, co-portfolio manager, Investec Global Multi-Asset Income Fund.
