New UK Prime Minister: Is This a Turning Point?
Photo Source: Reuters (https://www.reuters.com/world/uk/rishi-sunaks-first-speech-uk-prime-minister-2022-10-25/)
Many of us with ties to the UK have spent the last 6 years in shock and disbelief as the UK has pushed the self-destruct button. Brexit, in the opinion of many, was the starting point for this downward slide which has negatively affected the UK economy and people in the UK.
Hindsight has made it very clear that Brexit is the reason why the UK has lost credibility in the eyes of the world and as a result, people of the UK have suffered, especially the young.
The issues the UK has faced and how divided the country is, has been highlighted by the frequent changes in Prime Minister and other Ministers which has culminated in the comedy of errors we have seen with regard to Liz Truss.
It is fair to say that none of the Prime Ministers and many of the Ministers that the UK has had since Brexit have had the experience or qualifications to be able to perform their job effectively. Many have focused more on marketing and lies without the ability to make important decisions to enable the country to move forward.
So once again, the UK has another Prime Minister, and will things be different this time?
Rishi Sunak is the first person of color amazingly to become Prime Minister in the UK and is a practicing Hindu. His father was a GP in the NHS. He has run a very successful and profitable business in the UK. Due to his roots and background, he understands international business and politics. He is young and rich and believes in a good education for all.
On the face of it, his credentials look perfect for the role of PM as he understands many aspects of life in the UK and internationally which can help him rebuild the reputation of the UK both in EU and globally.
His wealth will hopefully mean he has no need to get involved with the sordid and corrupt aspects of politics we saw with Johnson during the Covid years with all the parties and dodgy Covid contracts and massive waste. Coming from a business background will help him to get those around him to better focus on properly managing their departments and save money as opposed to the ‘waste’ we saw during the Johnson years. Running a country also requires a degree of knowledge and common-sense which Truss and Johnson were incapable of ever achieving.
Currently, the GBP is at historic lows against the USD and many other currencies.
The UK stock market has not grown over the past 5 years while the US market has roughly doubled.
Many of the problems associated with the GBP and the UK market have been caused by the instability in UK politics and the lack of any long-term plan or direction. As a result, investors have junked the GBP and the UK market.
The UK faces an incredibly difficult future with regard to its finances and future prosperity and the implications of Brexit will affect the UK economy for decades to come. Inflation will not go away quickly, and the UK will need to increase rates multiple times to try and reduce inflation.
It is hard to underestimate the size of the job and the difficulties Rishi Sunak faces. Of all the candidates perhaps, he is the most suited to slowly putting the UK back on a sounder footing.
If this is the case, it is fair to say that the current situation in the UK is already factored into the price of the GBP and the UK Stock market. If the Conservative party can get behind the new PM and he starts to show the market what he can do in terms of bringing stability and predictability to the market, we could in the near future see an uptick in the fortunes of the GBP and the UK Stock market.
This article is geared to helping the following people who may benefit from a chat with a financial coach about the current situation in the UK.
UK expats working abroad and earning money in a currency other than GBP
UK expats holding a currency other than GBP but will likely return to the UK.
UK expats looking to buy property in the UK.
Other nationalities looking to buy property in the UK.
People with exposure to the UK market through pensions or other investments.
Expats wanting to invest in the UK and potentially benefit as the GBP and UK market improve.
Parents who may want to send their kids for education in the UK.
Investors looking to setup business in the UK or relocate to the UK.
Property Investors in the UK market.