It has been reported that the sudden resignation of Chancellor of the Exchequer Sajid Javid is expected to mean looser fiscal policy, which will be good news for UK assets, but experts have warned the move increases short-term uncertainty.
In a shock to the market and the UK public, the Chancellor announced his resignation today (13 February), just under a month before he was expected to deliver the first post-Brexit Budget. Chief Secretary to the Treasury Rishi Sunak has been confirmed as his replacement.
The markets seem to have taken the news as a positive development, with sterling rising against both the US dollar and the euro on expectations that the new Chancellor will employ looser monetary policy to boost markets.
However, cautious voices have also pointed out that the Chancellor’s resignation so close to the Budget spells more uncertainty for savers and investors.
Adrian Lowcock, head of personal investing at Willis Owen, said: “The resignation of Sajid Javid today has sent shock waves throughout the financial services industry. He is the first Chancellor in modern history to not deliver a Budget.
“With only 27 days to go now until the Budget, it is unclear whether it will even go ahead with so little time for Javid’s replacement, Rishi Sunak, to prepare.
Rachael Griffin, tax and financial planning expert at Quilter, pointed out that incoming Chancellor Sunak will have to work “extraordinarily quickly to get a grip on the upcoming Budget and present it to Parliament next month”.
“It is yet to be seen whether Sunak will serve as No. 10’s puppet, given the speculation that the Prime Minister’s office is seeking to take closer control of the Treasury,” she said.
She added: “He will inherit several political hot potatoes. For instance the government has already promised to fix its disastrous pension annual allowance taper, which has led to staffing shortages in key public services, including the NHS.
“The government is also under pressure to address the issue of social care funding which has been kicked down the road multiple times and was a major Tory manifesto pledge.”