Well, at least Boris Johnson’s tenure as UK prime minister lasted longer than Neville Chamberlain’s. So he’s got that going for him, we guess.
Although Johnson’s tenure has been defined by scandal, one can argue (and we are) that it was Britain’s lousy economy that ultimately did him in.
So no wonder the public isn’t exactly bullish on Boris.
But why is the UK economy so much worse off than its peers? Let’s start with Brexit, Johnson’s “signature” achievement. Leaving the European Union:
- Exacerbated crippling labor shortages and increased operating costs for businesses. Check.
- Hasn’t boosted trade as Johnson and other Brexit advocates promised. Also check. In fact, it caused the United Kingdom to miss much of the recovery in global trade since the pandemic, according to a March report from the Office for Budget Responsibility, the government’s fiscal watchdog.
- Forced the UK to rely more heavily on foreign investment to make up for the fact that the country is importing far more than it exports, sending the UK balance of payments deficit soaring to 8.3% of GDP in the first quarter of 2022. Yeah, check here, too.
- Sent the pound tumbling, driving up the cost of those imports. Big time check.
- Put the UK on the verge of a trade war with the European Union. Ugh, check.
Against that backdrop, the global economic pressures every country faces — a messed-up supply chain caused by the pandemic and surging commodity prices due to Russia’s invasion of Ukraine — have hurt the United Kingdom much more than its G7 allies.
A recession looms for whoever is unlucky enough to take over for Johnson, as the world’s fifth-biggest economy ground to a halt in February, started shrinking in March and got even worse in April. As inflation soars, British consumers are buying less, and anti-poverty campaigners say UK households have been forced to choose between “heating and eating.” Every major sector of the economy is going in reverse, according to the Office for National Statistics.
Oh, and it’s going to get worse: The UK economic outlook has “deteriorated materially,” the Bank of England said. And the Organisation for Economic Co-operation and Development forecast last month that the UK economy won’t grow at all next year — the worst expectations for any G7 economy next year.
So, yeah, the scandals weren’t great for Johnson. But political leaders all over the globe are facing immense pressure because of inflation. It turns out people really don’t like it when they can’t afford to buy the stuff they want. Johnson’s scandals were the last straw for a prime minister already on paper-thin ice.
NUMBER OF THE DAY: 9
GAME STOP IT
The company’s board Wednesday approved a 4-for-1 stock split, effective July 22. For current GameStop shareholders, the overall value of their investment will stay the same, but they will own four times as many shares when all is said and done.
Depending on where GameStop’s stock is trading in a couple weeks, that should bring the stock’s price down to $30ish — about where it was before meme-stock mania sent shares surging as high as $347 in January 2021.
Shares of the meme stock darling soared following the news Thursday.
Hard to believe, but even at a third of its all-time high, GameStop may still be a bit pricey for individual investors. Making the stock cheaper could boost demand and create more liquidity for the company.
Although deep-pocketed institutional investors are typically unfazed by high share prices, individual investors might be turned off by sky-high price tags. The growth of zero-fee trading apps, including Robinhood, E-Trade and others, have boosted demand for meme stocks like GameStop and AMC — and helped made stock splits more attractive in recent years.
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