UK stocks and pound surge on Johnson’s election triumph – Gulf Today

The election result is projected onto the Broadcasting House in London on Friday. Reuters

Other European stock markets although lagging buoyant London, which rose over two per cent at one point also powered ahead.

Wall Street opened with a slightly softer tone.

Investors might have two early Christmas presents this week: a phase one trade deal between the US and China, and Brexit getting done, said Jasper Lawler, head of research at trading firm London Capital Group.

Johnson, whose governing Conservative Party swept to a decisive win, will now push ahead with Britains scheduled exit from the European Union on January 31 as he seeks to dispel three years of uncertainty and political deadlock, with a post-Brexit, probably expansionary, budget planned in March.

The UK general election has provided a clearer path towards a resolution to Brexit and looser fiscal policy, which should boost economic activity and push up sterling, UK equities, and Gilt yields, said Hubert de Barochez, an economist with Capital Economics.

But he also warned that as long as there remains the possibility of something like a no deal, those gains ought to be limited.

European leaders welcomed also what appeared to be an end to Brexit paralysis, but also warned Britain against becoming unfair competitor.

The sheer scale of Thursdays victory the biggest Conservative majority since Margaret Thatchers heyday in the 1980s sent the pound soaring to an 18-month dollar peak and to highs against the euro not seen since the June 2016 Brexit referendum.

Investors expressed relief that Johnson roundly defeated main opposition leader Jeremy Corbyns Labour Party which had vowed to renationalise formerly state-owned companies.

The threat to businesses from the Labour policies has been removed and there has been a collective sigh of relief, said Maurice Pomery, founder of trading group Strategic Alpha.

The pound held at elevated levels on Friday but pulled back somewhat from the multi-month peaks forged overnight.

Meanwhile, British business on Friday urged Prime Minister Boris Johnson to provide clarity and assurances on his Brexit deal, while stimulating the stalled UK economy, after his Conservative partys emphatic election victory.

After three years of (political) gridlock, the prime minister has a clear mandate to govern, Carolyn Fairbairn, director general of the Confederation of British Industry (CBI), said in a statement.

Businesses across the UK urge him to use it to rebuild confidence in our economy and break the cycle of uncertainty. Fairbairn said early reassurance on Brexit will be vital, noting that firms will continue to do all they can to prepare for Brexit, but will want to know they wont face another no deal cliff-edge next year.

Britain is set to depart the EU by a deadline of January 31 thanks to Johnsons decisive victory in Thursdays general election.

But he still has to negotiate a new economic partnership with the bloc that remains Britains biggest trading partner.

Catherine McGuinness, policy chair at the City of London Corporation, a local government authority for the capitals powerful financial district, pointed to a long road ahead on Brexit with Britain having to negotiate trade deals also with non-EU nations.

For the City, it is vital that the future framework agreement recognises the enormous contribution of the services sector, securing maximum market access and developing a structure for the UK economy to prosper in the years ahead, she added.

Johnson, whose general election campaign message was Get Brexit done, has promised to forge a Canada-style free trade agreement with the European Union, handing Britain greater freedom from EU rules but would involve more barriers and costs to trade.

British companies... are eager for some clarity now, Jonathan Geldart, director general of the Institute of Directors, said on Friday.

For directors, Get Brexit done will only have meaning once the details of our long-term future relationship with the EU are clear. Geldart added: The prime minister must resist the urge for arbitrary negotiating deadlines, and should commit to a proper adjustment period that starts when businesses know the full detail of what changes they may be facing. - Skilled workforce - On the domestic front, business leaders on Friday urged the new government to be mindful of shaking up Britains immigration, noting the need for skilled workers to help grow Britains stalled economy.

The UKs future success depends on attracting, retaining and developing high quality talent, said McGuinness.

A critical first step is creating an effective and efficient visa system to meet demand for talented individuals. But the government also needs to look closer to home to supercharge our own skills agenda. Concerns about mass immigration from the EU was one of the drivers of the Brexit referendum in 2016.

Agencies

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UK stocks and pound surge on Johnson's election triumph - Gulf Today