Defence Minister Wallace Resigns

Wires reporting that UK Defence Minister Ben Wallace has submitted his letter of resignation to Prime Minister Rishi Sunak. The resignation of a defence minister would not usually prove market-relevant. However, Wallace has been viewed as one of the most hawkish Western defence ministers with regards to what the NATO response to Russia should be, as well as backing significant increases in military provision to Ukraine. As such, a change at the UK Ministry of Defence could have an impact on the future direction of UK and wider NATO actions with regards to the war in Ukraine.

• Wallace's resignation was widely expected to take place at some point over the autumn period following his failure to secure the NATO Secretary-General position as well as his announcement that he would be standing down as an MP at the next general election.
• Wallace's resignation could spark off a long-rumoured Cabinet reshuffle. With parliament returning from its summer recess on 4 September, speculation is that Sunak will shake up his group of ministers in an effort to gain some impetus. His centre-right Conservatives trail the centre-left Labour party by around 15-20% in most opinion polls. Without a significant shift in this dynamic, the continuation of a Conservative gov't looks unlikely beyond the election.
• While Labour head Sir Keir Starmer has sought to portray a shift to the political centre-ground under his leadership, there remains the prospect of increases in gov't spending or tax increases should the come to power.