The United Kingdom's pound sterling jumped against the U.S. dollar late Wednesday as talks of new elections in London excited currency markets causing the currency to appreciate. Prime Minister Boris Johnson has had a very rocky start to his tenure as leader of the government and sees new elections as his only way out. Having lost a majority in Parliament and being boxed in by legislation that would prevent him from allowing a "no-deal" Brexit, Johnson and indeed the country appear to be headed for exactly that type of Brexit.
Johnson weathered a very turbulent Prime Minister's Questions, his first, Wednesday and his performance left many wondering what had happened to the Boris Johnson known for great oratory. He stammered, he stuttered, he was lost for words. He attacked questioners and nearly evaded all questions he was asked. He lobbied to replace the London Mayor Sadiq Khan at one point and had difficulty defending his own anti-Islamic statements. Normally new elections would be the last thing a prime minister would want, however, they appear to be the only way out for Boris Johnson.
In deflecting Labour Party leader Jeremey Corbyn's questions, Johnson accused the Labour party of "dither and delay" and of "scaremongering." He went on to say that a no-deal Brexit would not be "nearly as bad" as the opposition had tried to convince the public it would be. Whether the government is indeed prepared for a no-deal Brexit is anyone's guess but at this writing, there is a good chance of the House of Commons passing legislation that would force Johnson to abandon no-deal Brexit while also forcing him to accept that new elections would also mean that any new government would be prohibited from accepting a no-deal Brexit. How the latter will be possible is unclear, but Brexit itself still appears to garner the support of a majority of Britons.
Johnson is banking on a backlash from the voters of the "Leave" campaign and their support to catapult him to a victory in snap elections. Many Labour voters who also favor "leave" have become disenfranchised according to Johnson's calculus and he believes snap elections would deal Labour a devastating defeat. Corbyn appears to fear the same fate in opposing new elections and with only days left before the Parliament is sent on its recess, the clock has run out for both parties as they head back to their constituencies ahead of the October 31 deadline.
During Wednesday's Prime Minister's Questions the leader of the Scottish National Party (SNP), Ian Blackford asked the prime minister, "are you a dictator or are you a democrat?" This attack by the Scottish leader was a surreal statement especially as it was made in historically the oldest legislative body in the world. Yet, the statement isn't completely unfounded. The second prime minister to come to power without a general election in a row and one who doesn't even have the support of parliament is running the country. While "dictatorship" maybe a little harsh, perhaps Blackford would be right in his assessment of the current state of affairs as being undemocratic. Short of snap elections and a resolution to continued uncertainty in the U.K., investors will be wary of jumping back in to British investments.
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