London shares were higher this morning but sterling lost ground as the fight to replace Theresa May as leader of the governing Conservative Party shifted up a gear.
In a crowded 11-strong field of candidates, Boris Johnson, former Foreign Secretary, remains the favourite, although front-runners have never won a contested leadership race since the party first held a ballot for the top job in 1965.
The first vote, held among MPs only, will take place on Thursday, and anyone with fewer than 17 votes will be eliminated.
Brexit is the key issue
After a second ballot of MPs, the two front runners will then take their case to the party membership, and a winner will emerge on 22 July.
Until that time, Mrs May, whose has stood down as party leader, will remain as Prime Minister.
Brexit is the key issue in the race, and it was Mrs May’s failure to get her deal past Parliament that doomed her leadership. Of the contenders, Mr Johnson, along with Andrea Leadsom, Esther McVey and Dominic Raab is thought to favour a “hard”, or “clean break” Brexit, while Rory Stewart, the International Development Secretary, is understood to prefer a softer Brexit, with Britain remaining closely aligned with the European Union.
This morning, the blue-chip FTSE 100 index was up 0.56% at 7,373.06, while the FTSE 250 index, which is more representative of domestic British business, was 0.23% higher at 19,277.38.
Against the yen, the pound was down 0.07% to 137.7350 yen.
Candidate numbers unprecedented
Mr Johnson is currently leading the field, but the track record of Conservative Party favourites is not a good one. In 1965, Reginald Maudling, the front runner, lost to Edward Heath and, ten years later, hot favourite William Whitelaw went down to outsider Margaret Thatcher.
In 1990, Mrs Thatcher was replaced not by front runner Michael Heseltine but by the relatively unknown John Major, and in 1997 he, in turn, was succeeded not by the favourite, Kenneth Clarke, but by William Hague.
Only when the leadership has been uncontested has the favourite won through. This happened in 2003, when Michael Howard replaced Mr Duncan Smith, and 2016, when Theresa May succeeded David Cameron.
The number of candidates for the top job is unprecedented. The five, initially six, who entered the lists after the party’s crushing 1997 election defeat was thought quite cumbersome at the time, which may explain why the sixth name on the list, Stephen Dorrell, withdrew. There have been suggestions that at least some of the current crop of candidates are standing merely to stake a claim to important jobs after the election.