Official Yoshihide Suga becomes the new prime minister
In the election of the ruling Liberal Democratic Party leader, Chief Cabinet Secretary Yoshihide Suga received a total of 377 votes from 535 members of Congress and local votes. He successfully won and automatically became the new prime minister, replacing the former Prime Minister Shin Abe who resigned due to health issues. Third, complete Abe’s remaining term of about one year. As the new Prime Minister Yoshihide Suga said earlier that he would further strengthen the “Abe economy” model, promote investment and reforms, and save the economy that has been hit hard by the new crown pneumonia epidemic, the market generally expects that after Suga Yoshihide takes office, there will be no economic policy. Significant changes have occurred. And because it has the majority of support in the party and under the gloom of the new crown epidemic, it is expected that Yoshihide Suga will not arbitrarily dissolve the parliament and re-election, which will help eliminate short-term political uncertainty.
The market expects that the passage of the Internal Market Act will reduce the UK GDP by at least 3%
British Prime Minister Johnson stated during the Second Reading debate of the “Internal Market Bill” in Parliament that the relevant bill is only a safeguard measure to eliminate the EU’s threat in trade negotiations and has no intention of using it. He also pointed out that during the Brexit trade negotiations, the European Union threatened to set up barriers to cut off trade between Northern Ireland and England as a bargaining chip. Therefore, it is necessary to propose some provisions that can override the Brexit agreement as an emergency response. Although Prime Minister Johnson defended the bill, the market generally expects that once the bill is passed, negotiations on behalf of the EU-UK transition period will break down. The current market estimates that there is a one-third chance of a “disorderly Brexit” in the UK. Under this circumstance, the UK’s gross domestic product (GDP) will be at least or dragged down by nearly three percentage points next year. At that time, the Bank of England may also need to expand the scale of its asset purchase plan, or even implement negative interest rates.
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