LONDON (Reuters) - British Prime Minister Boris Johnson has named Rishi Sunak as his new finance minister after the surprise resignation of Sajid Javid during a ministerial reshuffle on Thursday.
Sunak has until now been chief secretary to the treasury, the second in command to the finance minister, overseeing public spending.
“I don’t know what the new chancellor is likely to do but I suspect he is likely to do whatever Boris Johnson tells him to do. If you are coming in as a new member of the cabinet you have to accept the prime minister’s policy of the day. I don’t know what that means for the public finances and fiscal policy but I doubt it will mean tighter fiscal policy, put it that way.
“The question now is whether the fiscal rules are going to change. If anything it makes it more likely that we get looser fiscal policy.”
“It may be connected to an ongoing dispute over special advisors rather than the stance of budget measures. (With) Rishi Sunak, because he is chief secretary to the Treasury, we would envisage there would be a large degree of policy continuity at the forthcoming budget in less than a month’s time.”
ADAM SEAGRAVE, HEAD OF GLOBAL SALES TRADING AT SAXO MARKETS:
“The initial reaction has been weaker sterling but we are now seeing a rally to a new high. This is presumably the market interpreting the announcement as Boris wanting advisors who are more willing to back aggressive fiscal stimulus.”
“The unexpected resignation of Sajid Javid as Chancellor and the promotion of Rishi Sunak to the role could mean that fiscal policy will provide an even bigger boost to GDP growth over the next few years than we already expected.”
“It’s the culmination of a number of clashes that originate from Javid’s apparent reluctance to significantly increase public borrowing by cutting taxes and/or increasing spending and investment. In other words, the move seems designed to allow the government to push through even bigger increases in public investment and perhaps resuscitate tax cuts that previously looked dead in the water.”
“His voting history shows he’s an ardent Brexiteer, supports reductions in corporation tax, cuts to capital gains tax and he’s gone on the record as favouring infrastructure investment. So this is either going to be a meeting of minds or Sunak will be the Prime Minister’s yes man living in Number 11.”
Reporting by David Milliken; Editing by William Schomberg