UK: Early announcement of the new PM – Deutsche Bank

Research Team at Deutsche Bank, suggests that it is going to be an early announcement of the new UK PM and it could now mean that the next few days and couple of weeks might tell us a lot about global economic policy going forward.

Key Quotes

“With a new PM (Theresa May) now suddenly in place in the UK - two months earlier than expected - the post Brexit policy agenda will soon be set. A combination of a new PM and Brexit is an opportunity for one country at least to embark on a major policy shift in a world where economic policy is in danger of going slowly down a col-de-sac.

Obviously we may just have more of the same (loose monetary policy and fiscal straight jackets) but it's possible that the UK might use Brexit as an excuse to loosen fiscal policy with the Bank of England there to support it. Indeed it wouldn't be a surprise to see looser fiscal policy and more UK QE before year end and if that's not officially called helicopter money it might as well be.

So watch to see who the new UK chancellor is and what they say. Listening to Theresa May yesterday you get the sense she would move away from deficit reduction being at the centre of policy. However the favourite for the Chancellorship according to the press seems to be Phillip Hammond who is known to be a fiscal hawk. So a fair bit of intrigue ahead. It's likely her cabinet will be in place by Thursday. One interesting comment May made recently was that Article 50 wouldn't be triggered this year. Whether this changes given her unexpected early coronation will also be closely watched.”