U.K. PM Johnson to Resign as Party Leader, Will Stay on as PM Until Autumn

© Reuters

By Geoffrey Smith 

Fxgecko.com -- Boris Johnson is to resign as Conservative Party leader on Thursday but intends to stay on as Prime Minister until the autumn, the BBC reported on Thursday, citing people familiar with his thinking.

The BBC said Johnson will make a statement "within hours."

"A Conservative leadership race will take place this summer and a new Prime Minister will be in place in time for the Tory party conference in October," the BBC's political editor Chris Mason said.

Johnson's position as Prime Minister has become increasingly hopeless as dozens of government ministers, including Treasury chief Rishi Sunak and Health Minister Sajid Javid, have resigned in protest at Johnson's perceived lack of integrity and a confused policy course. The final straw appears to have come when Nadhim Zadawi, the man whom Johnson had chosen to replace Sunak as Chancellor of the Exchequer only 24 hours earlier, called on him to resign on Thursday morning.

The pound ticked up on the news to trade at $1.1935, up 0.3% on the day, by 4:20 AM ET (0820 GMT). It was also 0.3% higher against the GBP/EUR, at 1.1740.  

Benchmark U.K. government bond yields also rose, amid speculation that whoever replaces Johnson as Prime Minister will seek to cut taxes in an effort to shore up the party's popularity ratings. These have plummeted as Johnson has stumbled from one scandal to another in recent months, culminating in the biggest ever loss by an incumbent party at a mid-term by-election last month. U.K. benchmark stock indices rose, but underperformed larger gains in continental Europe.

The timing of the resignation comes awkwardly for U.K. financial markets, which are under pressure from a snowballing energy crisis that looks likely to tip the economy into recession later this year. 

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