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PM Under Pressure, But Tough To See Leadership Contest Before Autumn

UK
markets-real-timePolitical RiskPolitical Risk BulletBulletMarketsFixed IncomeForeign ExchangePolitical Market News

Prime Minister Boris Johnson has come under further pressure this morning following comments from former Foreign Office senior civil servant Lord McDonald that Johnson knew about allegations made against former deputy chief whip Chris Pincher MP, despite the gov't stating that Johnson was not aware of any specific allegations.

  • Today's events have resulted in another flurry of speculation on the PM's future. The 1922 Committee of backbench Conservative MPs holds elections for its vacant positions on 13 July, with the House of Commons breaking for summer recess one week later.
  • Should an anti-Johnson majority be formed on the 1922, they could amend party rules to allow for another confidence vote in Johnson's leadership. However, this could prove difficult to organise in the short timeframe (no leadership contest can take place while parliament is in recess).
  • There remains the House of Commons Privileges Committee's report into COVID rule-breaking at Downing St during the pandemic, and rebels are seen as likely to wait until its publication later in the autumn before challenging Johnson.
  • Betting markets remain in a state of uncertainty over the PM's future. This year is seen as the narrow favourite for Johnson's exit, with an implied probability of 37.9% according to Smarkets. Next year has an implied probability of 28.6%, while 2024 or later sits on 34.3%.
Chart 1. Betting Market Implied Probability of Year PM Johnson Leaves Office, %

Source: Smarkets

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Prime Minister Boris Johnson has come under further pressure this morning following comments from former Foreign Office senior civil servant Lord McDonald that Johnson knew about allegations made against former deputy chief whip Chris Pincher MP, despite the gov't stating that Johnson was not aware of any specific allegations.

  • Today's events have resulted in another flurry of speculation on the PM's future. The 1922 Committee of backbench Conservative MPs holds elections for its vacant positions on 13 July, with the House of Commons breaking for summer recess one week later.
  • Should an anti-Johnson majority be formed on the 1922, they could amend party rules to allow for another confidence vote in Johnson's leadership. However, this could prove difficult to organise in the short timeframe (no leadership contest can take place while parliament is in recess).
  • There remains the House of Commons Privileges Committee's report into COVID rule-breaking at Downing St during the pandemic, and rebels are seen as likely to wait until its publication later in the autumn before challenging Johnson.
  • Betting markets remain in a state of uncertainty over the PM's future. This year is seen as the narrow favourite for Johnson's exit, with an implied probability of 37.9% according to Smarkets. Next year has an implied probability of 28.6%, while 2024 or later sits on 34.3%.
Chart 1. Betting Market Implied Probability of Year PM Johnson Leaves Office, %

Source: Smarkets