On July 7, 2022 , UK Prime minister Boris Johnson announced his resignation after multiple scandals in recent months. The leader of the country's conservative party survived a no-confidence vote in June and has repeatedly said he would not step aside, despite call for his resignation. An unstable economy, corruption, allegations, revelations over past sexual misconduct allegations, "partygate" and a floor 0f ministerial resignations ultimately led to Johnson relenting and formally resigning.

It has been more than six years since Britain voted to leave the EU, but Brexit is still causing issues with failing supply chains, increased labor shortages, decreased manufacturing (with increased costs of operating business), and soaring energy and food prices. These have been exacerbated by the Covid-19 pandemic and Russia's invasion of Ukraine, creating the worst cost-of-living crisis in decades as British citizens are having to choose between heating and eating.

During his time as prime minister , Johnson insisted on rewriting trade rules with Norther Ireland and was often hostile to trade with the rest of EU Johnson has also threatened to tear up the Brexit treaty he signed, raised the possibility of retaliation to escalate a trade war, and has repeatedly poisoned relations with EU leaders further damaging the Uk's economy and global stanfing. Although Johnson succeeded in completing the Brexit process where his predecessor failed, breaking with EU has yet to boost trade as he promised. In order to make up for the vast difference between imports and exports, Johnson and his government have had to rely more heavily than ever on foreign investments. Without a strict, unified political strategy, the Britsh economy may only get worse.

Johnson will remain at Downing Street until a new prime minister can be elected, a process which can take weeks. While this has been one of the most tumultuous periods in modern British politics, some are wary that Johnson's successor will be able to calm things down, particularly amid divisions within the Conservative Party. Economists, however are hopeful that a new prime minister will be able to improve relations with the EU and potentially strengthen exports and investments.

WhyIs It News?

Britain has the world's fifth -largest economy, but the International Monetary Fund said the country faces more persistent inflation and slower economic growth than any other major economy in 2023. The pound is nearing a two-year low against the American dollar and Britain's central bank. Bank of England, has raised interest rates five times since December, making its steepest run of hike in 25 years.

Among the prominent resignations preceding Johnson stepping down was the Chancellor of the Exchequer RIshi Sunak, Britain's finance minister, who clashed with Johnson over tax cut policies. Sunak's short-term priority was to ease the burden of Britain's debt, which rose above GBP 2 trillion during the pandemic. Britain's debt is expected to triple by almost 320% of the national GDP in 50 years if the government does not tighten its fiscal policy.

UK stocks rose in response to Johnso's resignation and the pound gained 0.75% to trade at USD 1.20. Whoever ends up replacing Johnson will have to make big decisions on tax spending to potentially reduce the risk of recession. Currently, Johnson is refusing to implement a "caretaker" - essentially an interim prime minister- despite repeated calls for him to do so. G7 economists believe that a caretaker could push through short-term fiscal policies, strengthen institutional settings, and create more credible monetary policies than those Britain experienced under the Johson.

1) What leadership failures led to multiple members of Johnson's cabinet resigning and ultimately led to Johnson's own resignation?

2) What lesson about connection between stable leadership and economic health can be learned from Johnson's fraught tenure as prime minister?