Election threat sparks yet more UK turbulence

The failure of Boris Johnson to retain his Commons majority could see the UK facing a snap general election within weeks, as Britain prepares to leave the European Union at the end of October.

On Monday afternoon (UK time) Johnson was defeated in his first Commons vote after 21 Conservative MPs, including former Chancellor Philip Hammond, joined forces with the Opposition to pave the way for a bill designed to block a no-deal Brexit. The PM lost the vote by 328 to 301.

The loss makes Johnson, who became Prime Minister in July, the first Prime Minister in British history to lose his very first Commons vote.

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The bill wanted the PM to request an extension to Article 50 if he cannot strike a reworked deal with the EU. However, Johnson said if the bill passed at the next vote on Wednesday then he would instead seek a general election in mid-October.

Nigel Green, chief executive of deVere Group, said this indicated investors could not yet rest easy about their UK investments.

“Should lawmakers prevent a no-deal Brexit at the end of next month, we can expect the pound to get a boost. But at the same time, political upheaval and a general election will likely push sterling down. As such, the UK’s currency remains volatile and vulnerable.

“With the UK parliament plunged into a historic crisis, it is essential for domestic UK investors and international investors with exposure to UK assets to take steps to safeguard their assets. 

“The investors best weapon to do this? Ensure their portfolios are properly diversified across asset class, sector and regions, and to remain invested to take advantage of the upsides.”

 




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