Britain’s referendum to leave the European Union (EU) saw its first immediate political impact just moments after the votes were tallied, when Prime Minister David Cameron announced he would step down as Prime Minister of the UK after six years of leadership.
Cameron stated his intention to stay-on until sometime in the fall, to “steady the ship” as Britain prepares its exit. He suggested that a new leader should be in place by the start of the Conservative party’s conference in October.
Who will be the successor? This, of course, is an important question as it relates to the future of Britain. But, it is also important because it will be this successor, and not Cameron, that will likely have to invoke Article 50 of the Lisbon Treaty in order to start the “divorce” proceedings. The longer it takes to find a new leader, the more uncertainty the markets will have to endure waiting for Britain to make its official declaration of its intent to leave the EU.
Who is in the Running to be the Next Prime Minister?
Boris Johnson: A 52 year-old Brussels journalist, turned Member of Parliament (MP) and a former Mayor of London, is the runaway favorite among the Conservative party and bookmakers. Johnson, who spearheaded the “Leave” campaign, has yet to confirm anything formally. But, many believe the Brexit victory underscored his popularity, making him the favorite. Despite his significant popularity, Johnson faces one obstacle—if he gets selected as a party leader, then a general election is likely to follow as he was not a member of the government at the time that the Conservatives won their mandate in the 2015 general election.
Theresa May: 59 year-old financial consultant turned MP and Home Secretary since 2010, is another top-rated favorite. Ms. May first became MP in 1992, but her popularity quotient started to rise only after taking over as the Home Secretary. Many started to admire her for the way she handled tricky home affairs. She is a top pick among many MPs and seen as a Eurosceptic despite backing the “Remain” camp. The campaign against her focuses on her inability to cut net migration below 100,000, which led many to believe she can’t implement a strict enough system going forward. With immigration being a key issue, that tipped voters over the edge, this could work against her.
Michael Gove: Another journalist-MP combo and former Education Secretary and Justice Secretary, Gove also has an established angle for the PM post. Although he earned comprehensive admiration for advocating prison reform as Justice Secretary, he is largely seen as playing second fiddle to Boris Johnson in the “Leave” campaign, which could impede his leadership ambitions.
Priti Patel: The current Minister of State (Department for Work and Pensions) and MP since 2010 has risen quickly through the ranks of the Tory party, owing her recent popularity gain to her hard-hitting BREXIT campaign. But, that could also hurt her to a fault. Her over-aggressive campaigning style and unpopularity among worker unions (owing to welfare cuts and proposed legislation policies), could be a major deterrent on her road to becoming the PM.
Andrea Leadsom: The current Treasury Minister and Energy Minister made a name for herself in TV BREXIT debates, as she explained how a BREXIT wouldn’t hurt the British economy using her experience in financial services. This rise in fame makes her a dark horse in the race, but again her inexperience in top brass government jobs made many believe that Tory unity could be difficult for her.
The other prominent names that are doing the rounds for the race to become the PM are the highly ambitious, Nicky Morgan; the right-winged former defence secretary, Liam Fox; and the soft-spoken and first-bearded Cabinet Minister, Stephen Crabb.
What is the Process for Choosing the New Prime Minister?
As it stands now, the new Prime Minister will be chosen by a Conservative party leadership election, first time in Britain’s history. The election will have two parts:
1) Conservative MPs elect the two most popular candidates
2) When candidates are chosen, a postal ballot will be sent out to all Conservative party members, on a “one member, one vote” basis, and the winner of this vote will then become the new British Prime Minister.
This means that the next leader of UK is set to be chosen by 0.002% of UK’s population, i.e., 149,800 Conservative (also referred to as Tories) activists (as per the latest House of Commons Library data).
Bottom Line for Investors
The BREXIT victory has already sent economic shockwaves through global markets, and UK stocks saw their worst drop since the financial crisis with the pound falling to its lowest level since 1985—uncertainty looms.
That’s why it’s imperative that Britain acts quickly to set in motion its path forward. The first step is finding a new leader, and Britain should waste no time moving in that direction. Decisiveness and action are better for the markets than indecision and confusion. The sooner Britain arrives at the former, the better.
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