Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak have rejected calls to resign over their ‘partygate fines’ yesterday but it was another bad day in the headlines for both.
Predictably opposition Labour leader Keir Starmer led the calls alongside SNP head Nicola Sturgeon but a growing list of Conservative backbenchers unhappy over Johnson’s two-and half-year tenure also chimed in.
Tory flag-waver The Telegraph is even questioning how much longer the PM can survive.
Changes in political leadership usually impact the equity markets, with the French Presidential race a perfect example of how just a tighter than expected election can cause jitters, with further volatility of France’s leading index forecasted over the next two weeks by analysts.
Observers said that with the next UK general election two years away, investors and companies shouldn’t have to worry too much yet about a change of government.
However, that isn’t to say a change in leadership won’t have any impact.
Sunak’s stock plunged among the public last week following his and his wife’s non-dom UK status revelations and seemingly scuppering any chance of him succeeding Johnson even if wanted to.
According to Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, any markets jitters because of political instability are “likely to be short-lived.”
“Any major political developments in the coming days may well cause a short-term reaction on the UK market, but the long-term effects are likely to be minimal,” she adds.
“Political volatility is nothing new, and that’s showing, with the FTSE100 unperturbed by the news of rule-breaking at Number 10.”
Of course, any political instability does not translate to policy change, which will hit the markets hardest and for the longest.
“It may be the case that whoever is PM probably can’t deviate too much over the next two years from existing policies,” said Ruth Gregory, senior UK economist at Capital Economics.
“I suspect it's the behaviour of central banks, not political instability, that will take centre stage for the financial markets,” Gregory added.
The Tory party though is notoriously trigger happy when it comes to the leadership ahead of an election.
Local council polls in May won’t be pretty for the government and with Johnson and the Conservative party losing voters every day even if the policies stay the same, who’s making them might not.