Britain’s current Home Secretary Theresa May is set to replace David Cameron as U.K. prime minister as early as tomorrow, after her opponent, Energy Minister Andrea Leadsom abruptly withdrew from the race. Cameron said he will visit Queen Elizabeth II to resign after his last Q and A session in the House of Commons on Wednesday. The Queen will then invite Mrs May, as leader of the party with a majority in the House of Commons, to form a government.
The pound and British stocks rallied on Monday as May’s rival announced she was pulling out of the contest. Mrs May has committed herself to negotiating the best possible deal for Britain as the country prepares to exit the European Union. On Thursday, the Bank of England will announce their decision on interest rates. Many market participants believe that we will see a rate cut, however some economists are of the opinion that officials could hold fire until August.
After Spain and Portugal last week became the first EU countries to be deemed liable for breaching budget deficit limits, the European Commission is now looking at a way to satisfy both those who insist the EU adhere to its rules, and others who say financial punishments would be counter-productive.
In the aftermath of the UK Referendum, and with nations still struggling with debt, the EU’s leadership is wary of fueling support for anti-establishment political forces. Six years after Greece received its first of its three bailouts, leaders know that the credibility of Europe’s efforts to manage the economy is still in question.
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