Financial markets cheered the announcement of Theresa May's confirmation as the new Prime Minister of the U.K. but analysts have warned that this may be a knee-jerk reaction and uncertainty will continue to exist.
"Uncertainty is going to persist for a while until we know what deal or arrangements the U.K. makes with the European Union," Leila Butt, senior economist at Prudential Portfolio Management Group told CNBC on the sidelines of a briefing. "There will be greater clarity in the days ahead but for now we can't say much till we know what her policies will be."
In her leadership speech, May pledged to crack down on executive pay by making shareholder votes binding rather than advisory and to put workers onto company boards. "We should no longer seek to reach a budget surplus by the end of the Parliament," May said in her speech.
In a research note, Kallum Pickering, Senior U.K. Economist at Berenberg Bank says that tax increases should be avoided. "If before 2020 there is a choice between further spending cuts, more borrowing and tax rises, the priority must be to avoid tax increases since they would disrupt consumption, employment and investment."