British political turmoil is rooted in economic disadvantage

  Jiang Huadong

  The exposure of various political scandals has seriously damaged the brand of the Conservative Party, which is the direct cause of Prime Minister Boris Johnson's resignation, and the inability to solve economic problems is the root cause.

That's why many contenders for the next prime minister have made economic issues a priority.

The reshuffle of the government's leadership is expected to help improve domestic business sentiment and affect the current controversial tax policy.

However, these expectations are highly dependent on the election results, and the possibility and uncertainty of the expected reversal still exist.

  British Prime Minister Boris Johnson delivered a speech in front of No. 10 Downing Street in London on July 7, local time, saying that he resigned as the leader and prime minister of the ruling Conservative Party, but will remain in office until a new leader is elected.

  Before the Brexit referendum in 2016, the balance of strength between those who left the EU and those who remained in the EU changed in one fell swoop; in 2019, he led the Conservative Party to win the majority of the House of Commons; The impact of the direction of the UK is far-reaching.

  As UK foreign secretary and prime minister, Johnson represents the mission of Brexit and "building a new prosperity outside the EU", as the Royal Institute of International Affairs commented.

However, it is such a political figure who has "great achievements" on the two key issues of Brexit and the general election, but had to make the darkest decision in his political career when the UK was at its brightest.

  Judging from the shocking events in the British political arena in the first half of the year, a series of political scandals represented by "Party Gate" were the fuse that led to Johnson's resignation.

However, judging from the policy proposals of the main candidates for the prime ministership in the Conservative Party after Johnson's resignation, it seems that "popularity" is the deep-seated reason for all parties to abandon Johnson.

  Among them, the popular candidate to take over as prime minister, former Chancellor of the Exchequer Sunak, released a campaign video on social platforms a few days ago, promising to put finance as the top priority, and called on the public to objectively and rationally analyze the commitments of other candidates.

Former health secretary Javid and former foreign secretary Hunt also made economic issues a top priority.

  The fact that these contenders for the prime ministership have made economic issues their primary concern is no doubt well thought out.

  From the perspective of reshaping the UK's strategy and image as a great power after Brexit, Johnson has undoubtedly done a lot.

  Previously, in order to hedge against the changes in the model of the UK relying on the EU to exert its international influence after Brexit, the then British Prime Minister Theresa May proposed the "Global Britain" strategy.

Her successor, Johnson, not only implemented this plan in detail, but also used events such as the G7 summit and the Russian-Ukrainian conflict to build Britain into an important part of the international political and security landscape.

  However, Johnson's efforts on the global stage have not been supported by public opinion at home.

Ipsos polls from June 22 to 29 show Johnson's approval rating has fallen by 12% to 27% since September last year, lower than the approval ratings of Theresa May and David Cameron at any time. The last time a prime minister received such a low public opinion rating was a Labour prime minister during the international financial crisis.

Meanwhile, support for the Conservative Party fell by 4% to its lowest level in 10 years.

  On the one hand, there are constant actions in the international community, and on the other hand, the domestic public opinion support rate is declining.

Obviously, Johnson did not well address the core concerns of the British people.

In fact, although people pay more or less attention to hot news in Europe and other parts of the world, they are more concerned about real issues such as cost of living, job opportunities and salaries.

  A poll conducted by Ipsos over the same period showed that in the context of the current high inflation in the UK, the public's pessimistic expectations for the economy and concerns about serious inflation have continued to rise.

In terms of "feeling inflation", 50% of the respondents said that inflation has limited their purchasing power but they are still affordable; 20% of the people said that it is difficult to cope with price increases.

In terms of economic prospects, 77% of respondents expect the economy to continue to deteriorate in the next 12 months, an increase of 5 percentage points from May.

The Ipsos economic optimism index has dropped to -64, the lowest value since the international financial crisis.

  Dissatisfaction with Johnson's Conservative Party over economic governance has grown.

Polls show that while people still believe the Conservatives still have an advantage over Labour in maintaining economic growth, the Conservatives' lead has gradually declined from 13 points in March to 9 points and 6 points in May. 6 percent of the month.

Crucially, Labour is seen as having an advantage over the Conservatives in lowering the cost of living for families, leading the Conservatives by 12 percentage points.

Affected by this, polls show that the current Labor Party's support rate has reached 41%, and the Conservative Party's support rate is only 30%.

Only 21% of Britons think the Conservative Party is "fit to govern".

  It is not difficult to see from the above polls that the exposure of various political scandals has caused serious damage to the brand of the Conservative Party, which is the direct cause of Johnson's resignation.

However, the inability to address the economy may be the root cause of the Conservatives' abandonment of Johnson.

After all, there will be another general election in two years, and the current public's economic expectations before the election campaign is not optimistic.

This also explains why the popular candidate Sunak's campaign slogan is "rebuilding trust" first, and the second is "rebuilding the economy".

  In fact, financial market volatility also reflects the above situation to a certain extent.

The pound fell after key ministers in Johnson's government lost confidence in the prime minister and quit the government.

Sterling fell 1.4% after Sunak announced his resignation, and once fell to its lowest point since March 2020.

  However, the pound appreciated in the short term after Johnson announced his resignation.

An industry insider commented: "The appreciation of the pound is a 'negative compliment' to Johnson's government. Before he left No. 10 Downing Street, market confidence had left him; after he left, the market believed that the next thing will only increase the better."

  Where will Britain go after Johnson?

  As can be seen from the current market changes, the reshuffle of the government leadership is expected to help improve domestic business sentiment and affect the current controversial tax policy.

But these expectations are highly dependent on the final outcome of future Conservative elections.

The possibility and uncertainty of the expected reversal remain.

  In particular, there is still huge uncertainty as to whether the UK government can handle the core concerns of the public in the future.

The pound has been the worst-performing currency among the world's leading advanced economies this year.

The market expects that the initial "euphoria" brought about by the change of government in the UK may gradually give way to the grim reality of economic malaise.

Although the UK was the first to raise interest rates among the major developed economies, the "scramble" failed to effectively deal with and ease inflation, but instead increased concerns about the economy falling into recession and the possibility of having to cut interest rates in 2023.

  To be sure, the Bank of England is harder.

The Bank of England, already struggling to find a balance between the two key variables of inflation and growth, had to factor in the variables of political uncertainty.

  As John Kampfner, executive director of the UK Engagement World Initiative at the Royal Institute of International Affairs, put it: "Boris Johnson's departure is likely to remove much of the drama in British politics and diplomacy, which will be greeted by most Welcome. But policies and partnerships will still face tougher and longer-term tests.”