by Bill O’Grady
On June 23rd, voters in the U.K. shocked global markets by voting to leave the EU. In this report, we will examine the various paths the country may take in the coming months with regard to this issue, discuss the political lessons learned and the impact Brexit will have on other European nations. As always, we will conclude with the potential impact on markets.
In the aftermath of the Brexit vote, PM Cameron announced he would be stepping down in September and the ruling Conservatives will select a new prime minister. Over the past week, the Tories, who are members of Parliament (MPs), voted on potential replacements for Cameron. The party started with five candidates and, through party voting and resignations, that group has narrowed to Home Secretary Theresa May. Energy Minister Andrea Leadsom pulled out of the race today. May is a member of the “remain” camp but has indicated that she will respect the will of the people expressed in the referendum vote. Leadsom supported the “leave” campaign. Thus, her exit from the campaign does have an impact on whether or not Brexit actually occurs. It is unclear at this point, even though May is the only remaining candidate, whether the party will hold a membership vote in September to formally select her as the new prime minister.