Sterling and stock markets were lower this morning as the race for leadership of Britain’s governing Conservative Party was plunged into turmoil.
Three years exactly since the UK woke up on Midsummer Day 2016 to learn that it had voted to leave the European Union, the prospects for an orderly Brexit are overshadowed by serious problems for the front runner, Boris Johnson.
Reports of a domestic disturbance at his London home involving the former Foreign Secretary and his girlfriend have been compounded by his refusal to give details of what took place.
The favourite jinxed again?
His rival, the current Foreign Secretary Jeremy Hunt, has said that Mr Johnson should answer questions about the incident, which led to the police being called, although they concluded that no harm had been done.
This morning, the blue-chip FTSE 100 Index was 0.09% lower at 7,413.82. It has held fairly steady during the past year, having traded at 7,277.73 a month ago, at 7,177.58 three months ago and 7,509.84 a year ago.
In dollar terms, the pound was down 0.09% this morning at $1.2734, having changed hands at $1.2714 on 24 May, $1.3207 on 26 March and $1.3281 on 25 June 2018.
With Mr Johnson’s campaign in trouble, the spotlight has shifted to his rival, Mr Hunt, as observers recalled that in no contested election for the Tory leadership since 1965 has the favourite triumphed: Edward Heath, Margaret Thatcher, John Major, William Hague, Iain Duncan Smith, David Cameron and Theresa May all started out as underdogs.
“A flight of capital”
Mr Hunt, a happily married family man, is an obvious contrast with Mr Johnson. While the latter is a journalist and author with strong, sometimes controversial, opinions, Mr Hunt is a successful businessman who, prior to his move to the Foreign Office, was the longest-ever serving Health Secretary.
That said, Mr Johnson remains the favourite in a contest that will be decided by the party’s membership. What would have been Mr Hunt’s strong suit – that he is a safe pair of hands – has been tarnished by the fact that the current leader, Mrs May, was described in precisely those terms and is widely seen as having been unsuccessful.
This morning’s edition of The Times warns of the likely consequences: “That prospect will deter business investment and cause a flight of capital and a collapse in sterling-denominated assets. Britain's NATO [North Atlantic Treaty Organisation] allies will be left in the lurch.”