The battle to be the next Conservative party leader and therefore the next Prime Minister should be big City news in the coming week, amid the recent effect of Westminster politics on the pound and government bonds - though not everyone thinks so.
Ahead of the Friday cut-off date in this latest leadership election, nominations close at 2pm on Monday, with candidates requiring a minimum of 100 backers out of the total of 357 Conservative members of parliament.
If three candidates garner 100 votes, Conservative MPs will vote to decide the final two.
Before the party membership decides via online ballot who will lead the party, Tory MPs will hold a final “indicative” vote, to demonstrate which candidate has the widest support among the parliamentary party. The result will be announced on Friday 28 October.
“If only one candidate clears the 100 threshold by Monday, she or he will automatically win the leadership race. As it stands, only three candidates have any real chance,” said Berenberg chief economist Holger Schmieding.
Betting odds suggested former Chancellor of the Exchequer Rishi Sunak is out in front, but ex-PM Boris Johnson has “a non-trivial chance” of returning to 10 Downing Street, Schmieding said.
While markets may prefer Sunak, “risks arise if Johnson wins,” he added. “For good reason, the UK would further damage its international reputation. What is more, given that a majority of Conservative MPs probably do not want Johnson as their leader, the prospects of mass resignations and a further descent into chaos would loom large”.
Ruth Gregory at Capital Economics said: “Whoever is PM, we think a big fiscal tightening is on its way. This may mean that the recession will ultimately be deeper or longer than we expect and interest rates may not need to rise quite as far.”
If the race goes down to the wire, it will give the new PM less than three days before a promised fiscal statement by recently appointed Chancellor Jeremy Hunt, which is scheduled for Monday, 31 October – assuming he stays in the role.
Market analyst Neil Wilson at Markets.com argued that markets were now "not too fussed by it all really", following the kneejerk response to Liz Truss resigning.
“Trussonomics was already dead – political risk premia are certainly still attached to UK assets but not the full-on Moron Risk Premium. Does it matter who the PM is in the end? I doubt it very much matters now – there is not great ideological differences and the experiment with Truss is over.
“Boris might not be terribly keen on spending cuts but the reality is no Conservative government will ever take on the markets now. The bond vigilantes won.”