The appointment of Boris Johnson as prime minister of the United Kingdom has not convinced the British market. Since its arrival last July, investors have mobilized and disinvestments on the island have accelerated.
While during the month of June the withdrawal of investments was 744 million pounds, in July this amount has reached 1,200 million pounds, 38% more, according to figures published by the Investor Association of the United Kingdom.
The uncertainty regarding the process of separation of the United Kingdom from the European Union has increased after the arrival of Johnson, since he is in favor of carrying out a hard ‘Brexit’.
This situation does not favor the country’s market, as investors are increasingly reluctant to trust their savings to a country that has no solutions. However, in recent months investors have taken refuge in the bond market, which has experienced a rebound since Johnson’s appointment.
“We remain cautious about the complicated process of ‘ Brexit’ , as more volatility can occur , both in the pound and in the FTSE 100, depending on the news that we are getting to know by the end of the year,” analysts of Investing.com
The main index of the London Stock Exchange, the FTSE 100, has lost about 5% since Johnson succeeded Theresa May as the head of the country. Meanwhile, other European exchanges such as the Ibex 35 or the German DAX have fallen by around 2.5%.
In this context it has also been known that, according to the quarterly estimates of regional GDP, that the London financial services sector has been reduced by almost 12% in the last two years . This, together with the construction sector, are the main affected by the uncertainty generated by the ‘Brexit’ in the whole of the European Union.
Since the victory of the rupture on June 23, 2016, several funds domiciled in the United Kingdom have chosen to move their headquarters to other countries such as Luxembourg. According to an EY report, the British financial sector accumulates losses of 4,450 million euros due to the flight of foreign capital from the country, and this figure is only increasing.
In fact, the Bank of England has warned on numerous occasions of the risk of foreign investors losing their appetite for British financial assets due to a ‘Brexit’ without agreement.