— This is the script of CNBC's news report for China's CCTV on December 13, 2019, Friday.
In the financial market, exchange rates react first. After Boris Johnson won, the pound gained immediately.
Pound against US dollar increased 3% to 1.35, which this the highest level since May last year.
The win of Boris Johnson and Conservatives means the perspective of Brexit brighter, Britain leaving EU becomes an event with great probability. So in the short-term run, eliminating the uncertainty in Brexit, or at least reducing the uncertainty to a large extent, is good to both economy development and business.
However, a key problem is how it would be on Jan 31? According to the plan, Britain has a so-called transition period after Jan 31 to negotiate more on the Brexit details, now, it is still challenging and full of uncertainties. So in a long term run, the result of general election doesn't change the development trend of British economy.
British GDP of Oct increased zero percent month-to-month, that was lower than market's expectation, according to the latest data released by ONS on Tuesday. Compared to the performance from May to July, British GDP also gained zero percent in the 3 months till Oct. In these 3 months, service industry is the only contributing factor to GDP growth, but production department and construction industry shrank. In terms of year-on-year growth, the UK economy also grew by just 0.7 per cent in October, the slowest growth since March 2012. Before that, British consumer confidence also fell to a six-year low.
In order to leave the EU, Britain has paid huge economy cost, so after win the election, Boris Johnson needs to think of improving UK economy apart from leading the Brexit.
Boris advocates free market, before that he also published some economic stimulus pkg, including improving salary of public-sector workers and cut tax. The next big concern is how much fiscal and policy support the UK will give to economic growth. After Brexit, UK's trade relationship with other major economies, such as the U.S. is another concern.
Recently, when published its interest rate decisions, the BOE said UK economy will pickup soon next year, after the Brexit gets a stable situation. Will Boris Johnson reach this expectation? We will keep an eye on this issue.