Boris Johnson was the decisive winner of the Conservative leadership contest and has already started work as the UK’s 55th Prime Minister, in the process massively overhauling the ministerial team of his predecessor Theresa May.
Business owners in all sectors are inevitably asking how a Johnson premiership will affect them. Based on his previous pronouncements, here we look at some of the things Mr Johnson may look to introduce in financial services.
Investment Association chief executive Chris Cummings welcomed the news of Mr Johnson’s victory by pointing out that he had been a strong supporter of the City of London in his eight years as the city’s mayor. However, he also noted the volatility in the currency markets as the Brexit uncertainty continues and said that no deal would be “too much of a step into the unknown.”
During his campaign Mr Johnson promised to raise the 40p income tax threshold from £50,000 to £80,000. However, as he has no parliamentary majority, getting this proposal through the Commons may prove impossible.
Reports suggest Mr Johnson is considering scrapping stamp duty on all purchases of less than £500,000 and reducing the duty on purchases of less than £1.5 million from 12% to 7%. This radical change in the housing market might be one of the measures to stimulate the economy should there be a need for a ‘no-deal budget”. Former home secretary Sajid Javid has been chosen as Mr Johnson’s Chancellor, but at present it is unclear exactly what the economic position of the UK will be by the time Mr Javid unveils his first Budget.
There has also been talk of a ‘bonfire of regulation’ should the UK exit the EU without a deal, and many within the financial services industry would probably welcome that.
Earlier this year, the Financial Conduct Authority (FCA) was given a ‘temporary transitional power’ by the Government. In the event that the UK leaves the EU without a deal, the regulator will be able to delay or phase in changes to regulatory requirements made under the EU (Withdrawal) Act 2018 for a maximum of two years from the exit date. This should mean that firms can generally continue to comply with their regulatory obligations as they did before exit. Only one day after Mr Johnson took office, the FCA announced that the temporary transitional power has been extended until December 31 2020 at the earliest. October 31 2019 is of course the date on which Brexit is now scheduled to happen, so if that is to be the UK’s exit date, the power could yet be extended until Halloween in 2021.
The greatest uncertainty surrounding Mr Johnson’s premiership has to be the terms of the UK’s exit from the EU. The long-running saga has led to massive uncertainty for firms who still have little definite idea of what a post-Brexit world will look like. Neither can the precise effects of a no-deal exit be predicted, and whilst Mr Johnson said during the campaign that no-deal was a “one in a million” possibility, his new government has intensified its no-deal preparations and he has vowed not to resume talks with the EU unless it confirms that the Irish backstop will be removed entirely from any withdrawal agreement.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article