Closed May overhauls top team – as it happened

U.K. Prime Minister Theresa May Makes Her First Statement As The Country's New Leader

Theresa May, Britain’s new prime minister, has announced sweeping changes with her first cabinet.

Meanwhile the Bank of England has surprised markets by leaving interest rates on hold. Many had been expecting a cut.

Key appointments

  • Philip Hammond (treasury)
  • Boris Johnson (foreign office)
  • Amber Rudd (home office)
  • Justine Greening (education)
  • Liz Truss (justice)
  • David Davis (Brexit minister)
  • Liam Fox (international trade)
  • Jeremy Hunt (health)
  • Damian Green (work and pensions)
  • Michael Fallon (defence)
  • Chris Graylling (transport)
  • Andrea Leadsom (environment)

Key departures

  • George Osborne (treasury)
  • Michael Gove (justice)
  • Nicky Morgan (education)
  • Stephen Crabb (work and pensions)
  • John Whittingdale (culture)
  • Oliver Letwin (cabinet office)
  • Theresa Villers (Northern Ireland)


Welcome to our live coverage of today’s political ins and outs. We’ll be keeping an eye for the latest moves into the cabinet today as new prime minster Theresa May looks to fill out her government after entering No.10 yesterday.


The Daily Mirror’s front page has the most eye-catching take on the new cabinet appointments – well, one of them at least.

https://twitter.com/DailyMirror/status/753482266307862529


Other papers have taken a more measured approach. The Daily Telegraph hails the arrival of the Leave campaigners at the heart of the new government.

https://twitter.com/hendopolis/status/753337745737744388


The Sun prefers to lead with departures, rather than arrivals.

https://twitter.com/hendopolis/status/753343608380588033


The pro-Brexit Express goes with the three men charged with negotiating our way out of the EU.

https://twitter.com/hendopolis/status/753331895618928640




One highlight from last night – the moment Labour leadership challenger Angela Eagle hears that Boris Johnson is taking over at the Foreign Office.

https://twitter.com/drlangtry_girl/status/753339741056208897


The reaction to Johnson’s appointment is more mixed so far from Germany. This comes from our Berlin bureau:

In Germany the initial reaction to Boris Johnson’s appointment was shock and disbelief. Television presenters could barely suppress smiles as they announced London’s latest surprise. The online response was overwhelmingly critical: “This is how the political narcissist and clown gets his next stage, ” said one.

Chancellor Angela Merkel declined to respond directly to a question about the appointment but emphasised what she sees as important in relations with the UK – “cooperating very closely”.

She said: “I think that our task is to cooperate very closely with the governments of friendly countries. The world has enough problems which require good cooperation in foreign policy, as we have always shown in our cooperation with Great Britain.”

More reaction to come.



Before his appointment as secretary of state for exiting the European Union David Davis wrote an opinion piece for Conservative Home, the party’s leading blog.

Here is a flavour of his ambitions for Brexit:

So within two years, before the negotiation with the EU is likely to be complete, and therefore before anything material has changed, we can negotiate a free trade area massively larger than the EU. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.

Read the full story here.


A quick check in on the UK economy post-Brexit, and the signs are not very encouraging. This story comes from the FT’s Judith Evans:

Britain’s housing market has taken a post-referendum nosedive with a sharp drop in purchase enquiries at estate agents, a reduction in sales agreed and expectations of falling prices.

In its latest survey of estate agents and surveyors, conducted after the June 23 vote to leave the EU, the Royal Institution of Chartered Surveyors found a “marked drop in activity in the housing market”.


Richard Madeley – yes, the former presenter of ITV’s This Morning – says he went to school with the UK’s new chancellor, Philip Hammond. Here’s what he had to say about him back in 2013:

https://twitter.com/richardm56/status/333699601024577536


The BBC has compiled some international reaction to Boris Johnson’s appointment as foreign secretary.

The Washington Post’s Ishaan Tharoor writes that Mr Johnson “has controversially bucked the Western trend and praised Syrian President Bashar al-Assad for battling the Islamic State, no matter its parallel campaign of violence on Syria’s civilian population”.

The BBC says Mark Toner, the US state department spokesman “stifled a laugh” on hearing the news before commenting:”This is a relationship that goes beyond personalities and it is an absolutely critical moment in England’s history but also in the US-UK relationship.”

Carl Bildt, former Swedish prime minister, is less diplomatic, tweeting: “I wish it was a joke but I fear it isn’t. Exit upon exit”

Read the full BBC story here


Hammond replaces George Osborne at the Treasury, who has already changed his Twitter bio to “Member of parliament for Tatton” and tweeted his outro.

https://twitter.com/George_Osborne/status/753301644918530048

https://twitter.com/George_Osborne/status/753301829929361408


David Cameron’s social media farewell was far shorter:

https://twitter.com/David_Cameron/status/753255058196881408


Hammond has already set out some basic guidance on his first few months running the economy, this story from our politics team:

The new chancellor ruled out an emergency Budget, which had been mooted by George Osborne before the EU referendum. Mr Osborne was sacked by Theresa May, in almost her first act as prime minister.

Mr Hammond said he would take the summer to review with Mr Carney how to tackle the “chilling effect” of the Brexit vote on the economy, after fears in the Treasury that the economy could tip into recession.


Forget the cabinet, says the Spectator’s Isabel Hardman, it’ll be May’s coterie of advisers that really runs the show:

Given how slow May is to make new friends — and the trust she places in her old ones — her advisers might soon have more influence over the shape and direction of British government than any single cabinet member. One former colleague has said they may be as important to her as George Osborne, William Hague and Ed Llewellyn, the Downing Street chief of staff, were to David Cameron. One country-running quartet would replace another: except, in May’s case, she is the only one whowas elected.

Read the full piece here.


The cameras were on hand as new chief diplomat Boris Johnson left his house this morning, and snapped him failing to find his car.

https://twitter.com/PA/status/753499468322840576


The FT’s Philip Stephens reckons it would be in everyone’s interests to slow the pace of Brexit down. Read in full here.

We are living through a period of political and economic upheaval — in Britain and in the rest of the continent. What Mrs May must hope is that over time the politically impossible becomes the possible; that compromises unacceptable today are seen as common sense a year or two hence.

Why should Europe wait? Listen to Ms Merkel. The chancellor quite rightly insists that the EU will not be bent out of shape to accommodate the British. But she prefers deliberation to rushed decisions. She understands it is in Europe’s interest to rescue what can be salvaged from the wreckage and to emerge with relations with Britain on a reasonable footing. She also has an election to fight next year. So does French president François Hollande. Changes to EU-wide migration rules may seem more attractive. A pause might just suit everyone.


What is the Foreign Office for, now we have a special department to manage the Brexit negotiations and one to sort out our future trade relationships?

Paul Goodman at Conservative Home, the party’s leading blog, says Boris Johnson, the person in charge at King Charles Street, will want to apply his “brilliant mind” to this question.

On the same site, Garvan Walshe a former security policy adviser to the Conservative party, offers some answers here.


David Davis was one of Theresa May’s surprise cabinet appointments, but Tory MPs are doing their best to talk up his suitability for the job leading the Brexit negotiations this morning.

Here is Damian Green, the former home office minister, on BBC:

“David has always been a big eurosceptic but he was the whip that got the Maastricht vote through all those years ago and then he became Europe minister, so he’s very very experienced in that field.”


A quick check on UK markets:

The pound is sitting comfortably above the $1.32 level in the run up to the Bank of England’s first monetary policy announcement since the Brexit vote. Sterling is up 0.6 per cent on the session at $1.3227.

There are strong expectations that the BoE will announce a 25 basis point cut in interest rates, taking them to 0.25 per cent, and market analysts think such action looks priced in to sterling this morning.

The UK-centric FTSE 250 stock index is up 0.7 per cent in the run up to the midday announcement, with the more international FTSE 100 also up 0.7 per cent.


ITV reports that justice secretary Michael Gove is set for a sacking.

https://twitter.com/chrisshipitv/status/753509512850640897


A Swiss take on Johnson joining the cabinet:

https://twitter.com/JeremyCliffe/status/753491408573595652


Why has Theresa May appointed three Brexiters to manage Brexit? The FT’s George Parker has this:

Theresa May’s appointment of Boris Johnson, David Davis and Liam Fox to take Britain out of the EU is a bold move to let pro-Brexit ministers prove that there is a better future outside — and to make it clear where the blame lies if it goes wrong.

Mrs May’s approach is therefore to put Brexit in the hands of the liberal Leavers, hoping that they can deliver on her promise to “make Brexit a success”, but making it clear where responsibility lies.


Four women to watch

The next wave of government appointments are expected at 11am and Sky’s Beth Rigby says there are four women to watch:

- Justine Greening, the international development secretary and key May ally, will be looking for a promotion.

- Karen Bradley, a home office minister, also close to May

- Anne Milton, deputy chief whip, is tipped to become the party’s first female chief whip

- Andrea Leadsom, the energy minister. After winning the backing of 84 MPs, before withdrawing from the leadership race. Speculation is May will find a role for her.


EmoticonGove is out – says the BBC.


Nicky Morgan is also out. She was a Gove supporter, as well as education secretary.

https://twitter.com/NickyMorgan01/status/753521903051079680


ITV’s Robert Peston on the reshuffle:

https://twitter.com/Peston/status/753523099702792192


Earlier we said Philip Hammond was known for carrying around a copy of the Guardian. Not so, he now says:

https://twitter.com/LOS_Fisher/status/753506523163332608


Sackings are coming thick and fast now. Culture, media and sport secretary John Whittingdale is the latest:

https://twitter.com/JWhittingdale/status/753523405022986240


More evidence that Boris Johnson has some work ahead of him to mend ties with Turkey.

Turkish prime minister Binali Yildirim made his country’s views clear in a BBC interview just before Mr Johnson was made foreign secretary. He said Mr Johnson made an “unfortunate statement” when he used Turkey’s accession to the European Union negatively in posters during the UK referendum.

“May God help him and reform him, and I hope he won’t make any more mistakes and tries to make it up with the Turks.”

More here


The last two weeks of British politics will likely prove a goldmine for pub quiz masters for many years to come. Here’s another nice little detail for them:

https://twitter.com/jonathan_michie/status/753517719811715072


The biggest head to roll this morning is definitely that of Michael Gove, but is it the most surprising? It is just over two years ago that Theresa May’s advisers fought one of the bitterest intra-Whitehall fights of the Coalition era. Here is the FT story from that time from George Parker and Helen Warrell:

It started when “sources” close to Mr Gove, education secretary, accused Mrs May of going soft on extremism. The home secretary retaliated by posting a letter to Mr Gove on a government website, accusing him of losing control of the schools system.

Mr Cameron was furious and ordered his ministers to put on a public show of unity, senior Tories said. They suggested the prime minister was particularly dismayed with Mr Gove for publicising the spat in the first place. But there is a fundamental difference between the Neo-con attitude of Mr Gove – who wrote a book on tackling Islamic extremism called Celsius 7/7 – and Mrs May, whose department favours a softer approach ahead of the point where extremism tips into violence.

On Wednesday, the education secretary’s frustration was vented through “aides” in a front-page story in The Times; Mr Gove had lunch at the newspaper on Monday. It was followed swiftly by Mrs May’s team suggesting that she was “going in for the kill”.

Theresa May clearly emerged the stronger. As commentators have observed elsewhere, this is another nail in the coffin of the Policy Exchange/Notting Hill set of mid 2000s Tory reformers.


Not an auspicious start for Boris Johnson ahead, if these comments – via Reuters – from France are anything to go by:

In Boris Johnson, Britain has appointed a liar with his back against the wall as its new foreign secretary at a time when somebody reliable is needed in the role, his French counterpart Jean-Marc Ayrault said on Thursday.

Johnson campaigned successfully for Britons to vote to leave the European Union last month. In France, a founding EU member, he is seen as a key player in the departure and in the setback to European integration it represents.


Boris Johnson’s German counterpart Frank-Walter Steinmeier has had some caustic observations this morning about those who campaigned for Brexit including the new foreign secretary.

Describing the “rude awakening” the UK was going through, the German foreign minister said in a speech carried on BBC

“Irresponsible politicians lured the country into Brexit and once the decision was made, bolted and took no responsibility. Instead they went to play cricket. To be honest I find this outrageous. It’s not just bitter for Great Britain, it’s also bitter for the European Union”

Before pulling out of the Conservative leadership race – but in the immediate wake of the vote – Boris was photographed in British papers bat in hand in his cricket whites enjoying England’s favourite summer sport, in a team reportedly run by his university friend Earl Spencer.


Some perspective from FastFT’s Katie Martin on what it would it mean if the Bank of England cut rates today.

Here is her chart of the BoE’s base rate since 2009:

Katie adds:

After keeping rates on hold since March 2009, the central bank is expected to do… something today. The best guess is that this includes a quarter-point rate cut, but there’s also a chance that the bond-buying programme is restarted and/or that the Bank comes up with a new scheme to support lending.

More here.


The media appear to have decided: the correct title for the male spouse of the UK prime minister is First Husband. The FT has a profile of Theresa May’s husband, who has known the new PM for 40 years, and been married to her for over thirty.

His reputation as a stockpicker was cemented in 1998 when, as head of pension funds at Prudential Portfolio Managers, he collected an Extel fund management award, one of the City’s highest accolades.

But by the early 2000s while at Deutsche Asset Management, Mr May had started to move away from frontline money management. One person who has known him since his time at Deutsche described him as a “steady Eddy” rather than a star fund manager. “He was not at the cutting edge of the City.”

With more than thirty years’ experience in the City, there is understandable curiosity about his career. More of a people-person than a sharp suited trading type, it appears, and notably discreet. Number 10 needs calming people at the best of times. The early verdict on Philip May is that he may prove just that.


Jeremy Hunt is the latest cabinet minister to be given his marching orders, according to Alastair McLellan, editor of Health Service Journal.


As reshuffles go, this is a big one…

https://twitter.com/faisalislam/status/753529929422237696


And here is Michael Gove’s rather terse public acknowledgement of his sacking:

https://twitter.com/michaelgove/status/753529739860738049


And another one bites the dust. BBC reports Oliver Letwin is off to the backbenches.


One activity David Cameron eschewed for his entire time as Prime Minister was the Machinery of Government change: messing around with departmental shapes. Too much hassle, the laid back PM believed.

His predecessor Gordon Brown had considerable fun creating DECC (Energy and Climate Change) out of Trade and Industry, grabbing Universities from Education, jamming it together with what was then Business, Enterprise and Regulatory Reform to create BIS (Business, Innovation and Skills). This was expressly to accommodate Peter, then Lord Mandelson.

Now this empire looks likely to be dismantled. Liam Fox has already taken a Trade role, and there are rumours that Sajid Javid, the current boss of BIS, is on the way out:

https://twitter.com/bbclaurak/status/753528598292750336

Last year the FT carried an op-ed by, um, me on why BIS should be put out of its misery

With neither an animating vision nor a big beast’s ego to feed, it is hard to see the point of BIS. As it declines into an ever emptier shell lying in sad splendour opposite Westminster Abbey, it would be kinder to strip it back down to the humbler, Treasury-dominated department it once was.

The question is what follows. Will higher education revert to the Department of Education – and who will get that? And what prospects are there for industrial strategy if the department is so pared down? We should know more very soon.


Confirmation from No.10. No word yet on the fate of Jeremy Hunt or Sajid Javid.


A good day for junior doctors – the BBC confirms Hunt’s departure.

https://twitter.com/BBCBreaking/status/753532512450863105


Although Jeremy Hunt launched a very brief bid for the leadership, he was an early backer of Mrs May. This was his last tweet as health secretary:

https://twitter.com/Jeremy_Hunt/status/751779466523926528


Hold your horses! The BBC’s Laura Kuenssberg reckons Hunt may just be moving offices:

https://twitter.com/bbclaurak/status/753534712442916865


Oliver Letwin is gone (see below) – and if any group ought to feel sad it is the satirists, who have been hard pressed to match reality in recent weeks). Mr Letwin, formerly David Cameron’s all-purpose fixer in the Cabinet Office, had a reputation for being fiercely clever: capable of being an investment banker in the morning and full-time politician in the afternoon when in opposition, allegedly.

The Guardian carried a story a year ago listing his many gaffes, including leaving official papers in bins, sounding the premature alarm about a recession (in 2011), and telling the people of Sheffield not to go taking cheap foreign holidays.

His most recent scrape was a deep involvement in government support for the collapsed charity Kids Company, which the FT wrote about in depth.

Cabinet Office minister Oliver Letwin has said he does not regret giving £3m to the charity Kids Company just days before it collapsed, despite subsequent allegations of financial mismanagement.

The charity, run by Camila Batmanghelidjh, would have been able to improve its management and governance if it had not gone bust first, Mr Letwin told a committee of MPs.

His time at the heart of Conservative policymaking goes back a long way, including helping to devise the poll tax while working in Downing Street for Margaret Thatcher. As this blog from 2012 suggests, his ideal milieu was the politicking of the Coalition era. Not ideally suited to the May era, clearly.


Liz Truss is among the first to make their way into No.10 to see the new PM. As we wait to find out her new job, let’s take a moment to enjoy her most famous moment at Defra.


Theresa May is not as well known as her defeated main rivals for the Tory leadership, and there is now a premium on any insight into what working with her is like.

Civil Service World carries a piece interviewing Tony Smith, a lifer (well, four decades) from the Home Office whose last years coincided with Theresa May’s time there. His last job was director of the Border Force. Here he is on his decision to stay after the Olympics:

“It wasn’t an easy decision to make,” Smith recalls. “Because when you’ve got to a point where you’ve served for forty years and you’ve been through something like the Olympic security programme – you kind of think, ‘Maybe now is the time for me to take my pension’.

“But she was such a remarkable lady, and clearly somebody who had confidence in me to do this for her, at least until such time as she could find somebody else. She made the decision easy for me. I opted to stay on and I carried on for another six months until March 2013.

Mrs May held the Home Office brief for six years, quite an achievement in a department that is often the graveyard of political careers. Tony Smith puts this down to her doing her homework and knowing how to work with officials.


Theresa May’s Conservative colleagues profess to not knowing her very well.

One person who worked with her closely is Nick Timothy, a former chief of staff. Conservative Home’s Paul Goodman has this


There’s good news and bad news for Boris Johnson.

The good news is that – now that he’s foreign secretary – the bookies have put him in pole position to replace Mrs May one day as PM.

However, in the meantime he’ll be counting the pennies – at least if this piece from BuzzFeed proves accurate.


Legal expert David Allen Green blogs for the FT and has been kept rather busy of late by Brexit. The cabinet reshuffle has given him even more to think about, and here he looks into one of the crusades David Davis – the new Minister for Brexit – has embarked upon.

The choice of Mr Davis is a remarkable one in some ways. A sincere civil libertarian, as well as a pro-Brexit campaigner, he is one of a group of claimants suing the UK government at the European Court of Justice to enforce EU law on an allegedly non-compliant UK in respect of personal data rights. This case — which is reliant on the very charter of fundamental rights loathed by many in his own party — has already seen a decision of the high court saying an act of parliament was incompatible with EU law (though this was not upheld on appeal, it was referred to the ECJ instead).

The home secretary responsible for the legislation that Mr Davis is challenging is, of course, now prime minister. It is a curious situation when a prime minister appoints as the minister responsible for exiting the EU someone who is suing the UK government on the basis of it being in breach of “fundamental” EU law.

You have to love the understated Britishness of that “curious” .

But on the case in hand, Mr Green wonders whether any minister, no matter how capable, is up to the Brexit challenge:

the scale of his task is almost beyond comprehension. As was revealed by the evidence of Oliver Letwin, the previous minister responsible for Brexit, at the foreign office select committee hearing last week, it is not so much that the UK government does not have a plan for Brexit — it does not even know what is to go into a plan. It is barely in a state of pre-preparation for a political exercise that may take six years or more. Nobody in Whitehall or Westminster yet has a grasp of what needs to be done, let alone how to go about doing it

The politics — and policy — of Brexit, at least in practical terms, now becomes less about “will” and more about “capacity”. Whether it will happen will become the servant of whether it can be made to happen. As of today, there is no policy shape to Brexit, there is only shapelessness. And unless shape can be given to the great Brexit adventure, it is an open question whether it will ever happen.


If the biggest cabinet reshuffle in years isn’t doing it for you, then fear not – the economy is about to take centre stake again. We get the BoE rate decision in just 15 minutes, so hold on to your sterling futures. Here’s how the markets are positioned, fastFT.


Other people spotted walking into No.10 in the last few minutes: Justine Greening and Iain Duncan Smith.


Appointment klaxon – Liz Truss takes over from Michael Gove at the Ministry of Justice.


Appointment klaxon – Justine Greening goes to education. This is her:


Meanwhile, if you can drag your eyes away from Westminster, it’s 5 minutes until the Bank of England announces its decision on interest rates. Investors are betting the MPC will cut rates from 0.5% to 0.25% – which would be the first time it has changed rates since 2009.

Here’s a quick explainer on what to look out for.

We’ll bring you the highlights and market reaction on this blog.


Emoticon The Bank of England has surprised markets by holding interest rates at 0.5%. Investors were betting heavily the MPC would cut rates to support the economy post-Brexit vote.


Sterling is up 2.2 per cent after the BoE chose to keep rates on hold.


Here’s the key paragraph from the MPC statement: only 1 of 9 members – Gertjan Vlieghe – voted to cut rates this time. “Most members of the Committee expect monetary policy to be loosened in August.”

At its meeting ending on 13 July 2016, the MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%, with one member voting for a cut in Bank Rate to 0.25%. The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion. Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate. In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.


Here’s some quick reaction from Aberdeen Asset Management, economist Paul Diggle to the BoE decision:

“The Bank of England has decided that patience is a virtue. There’s going to be a bit of disappointment in financial markets. They had taken Carney’s earlier comments about easier monetary policy to heart and forgot his reputation for changing his mind. But the next meeting is only three weeks away, and by then Carney and his colleagues will have a few extra post-referendum data points to digest as well as a new set of forecasts. The market should get it’s way then, with an interest rate cut likely and renewed quantitative easing possible.”


Here’s the MPC statement on economic growth: in short, it’s too soon to tell, but the early indications are not good.

Official data on economic activity covering the period since the referendum are not yet available. However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence. Early indications from surveys and from contacts of the Bank’s Agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions. Regarding the housing market, survey data point to a significant weakening in expected activity. Taken together, these indicators suggest economic activity is likely to weaken in the near term.


The MPC minutes on financial/market stability: in short, holding up well.

The Committee had taken some reassurance from the evidence that markets had continued to function effectively throughout the period. The overall resilience of the UK financial system, and the flexibility of the regulatory framework, had allowed the impact of the referendum result to be dampened rather than amplified. There had been little sign that asset prices had been distorted by impaired market functioning.


A recently-appointed justice secretary tweets…

https://twitter.com/trussliz/status/753547496710926336


The last hour of being Jeremy Hunt, described neatly by the Guardian Gaby Hinsliff.

https://twitter.com/gabyhinsliff/status/753548797373022208

She’s referring to the latest rumours via the BBC that Hunt is in fact staying.


Here’s the reasoning of Gertjan Vlieghe (a relatively new external MPC member) on why he voted to cut rates this month. The other 8 voted to hold, but had an extensive discussion about what sort of stimulus would be appropriate in August.

For one member, the subdued economic outlook before the referendum had already come close to warranting further stimulus. The early evidence supported the view that demand was likely to weaken further following the referendum. The resulting outlook for medium-term inflation – even taking into account the boost from the lower level of sterling – therefore justified an immediate loosening of monetary policy, to be supplemented by a package of additional measures in August.


Appointment klaxon Gavin Williamson has been appointed chief whip. He was previously parliamentary private secretary to David Cameron. He looks like this:


Mark Carney is coming in for some criticism from UK economists, who are frustrated that he gave a speech post-Brexit that gave many investors the impression that the MPC would cut rates today. (To be fair to Carney, his language was never that precise – he only said stimulus would “probably be required over the summer.”)

Alan Clarke, the highly experienced UK economist at Scotia Bank, has fired off a frustrated note to clients about Mark Carney’s communications.

If ever there was a case for abandoning forward guidance and central bankers keeping quiet, this meeting is it. Virtually nobody was going for a rate cut at this meeting before Carney’s intervention a couple of weeks ago. Most assumed that the weakness of the pound and the need to wait for incoming data would lead to a pause at least until August. But for no apparent reason, Governor Carney decided to tease the market, let it price in a high probability of a rate cut, only to disappoint. As if the situation wasn’t volatile and uncertain enough, the BoE Governor poured petrol on the flames. This was a completely unnecessary intervention.

Angus Armstrong, director of macroeconomics at National Institute of Economic and Social Research, echoed the complaint:

“In their communications last week they gave a clear indication to anticipate further monetary accommodation”. This would also seem to follow from the Financial Policy Committee’s decision to ease the capital requirements for banks. He added: “The likelihood of monetary easing was subsequently discounted by financial markets. Whatever the economic merits or demerits of cutting interest rates at this juncture, the lack of clear direction is more likely to add to economic uncertainty and therefore be detrimental to demand and the economy”.


Time columnist Tim Montgomerie gives a big thumbs up to the new chief whip.

https://twitter.com/montie/status/753549320113287168


And here is some Twitter to the Bank’s surprise non-move. When was the last time the Bank did nothing and everyone was surprised?

Well, Andrew Sentance was a notable hawk when he was on the MPC, and is preening his hawkish feathers here.

https://twitter.com/asentance/status/753548359533731840

Whereas around the same time Tony Yates (one of those must-follow economists) was slaving away at the Bank himself. He sees the MPC chatting about future rises as an innovation apparently.

https://twitter.com/t0nyyates/status/753548552756953088

The FT’s Alan Beattie is another BOE alumnus and far less impressed.

https://twitter.com/alanbeattie/status/753545566697693184


The Daily Telegraph reckons that three whole government departments are set for the chop. This from their live blog:

Multiple sources have told me that the Department of Business, Innovation and Skills, the Department for Energy and Climate Change and the Department for Transport are set to be shut down. They could be replaced with two new departments – one for Infrastructure and one for Industry.


Appointment klaxon The outgoing secretary of state for transport Patrick McLoughlin has been appointed Chairman of the Conservative party.

https://twitter.com/ShippersUnbound/status/753551410189467648

One of the few Tory cabinet ministers with a working class background and a safe pair of hands at Transport – although the stalled progress of the Third Runway suggests his clout in the government was not as great as it might have been.

This is him:


Quick rundown via Fast FT of the immediate market reaction to the BoE’s surprise decision to do nothing today:

Sterling raced higher, gaining 2.7 per cent on the session to reach a peak of $1.3470. It has since slipped back to $1.3356.

The UK-centric FTSE 250 remains stronger on the day, up 0.3 per cent at 16,803.39, but off its day high of 16,907.41.

The FTSE 100 also held positive territory, and is up 0.4 per cent at 6,698.36 having reached 6,743.42

The yield on the UK’s benchmark 10-year gilt rose 5 basis points to 0.80 per cent as traders cut exposure to the debt.


Is the BoE buying time to come up with a bigger package of stimulus measures (perhaps a combo of rate cut and QE) in August? It’s possible, says Jonathan Loynes, chief European economist at Capital Economics.

Perhaps there was a case for holding off a bit in order to decide just what size and shape a policy loosening should be. Maybe the Committee will now pull together a bolder package of measures – including both a rate cut and more quantitative easing – which will pleasantly surprise the markets. We will see. In the meantime, though, today’s inaction will raise at least some doubts over the willingness of the MPC to look thought the likely inflationary consequences of the drop in the pound and take decisive action cushion the impact of the Brexit vote on the broader economy. It now needs to at least meet expectations, and preferably exceed them, in August.


Energy and business departments to merge

Theresa May is redrawing Whitehall as well as shaking up the cabinet, reports the FT’s Kiran Stacey:

The energy department is to be merged with the business department, according to people who have been briefed on the plans.

The business department has lost responsibility for trade, which is to become a separate department under the leadership of Liam Fox. But officials say it will now gain control over energy and climate policy, which has been a separate entity since 2008.

The move is likely to disappoint green campaigners, who have welcomed having a champion for clean energy policy at the heart of government. It will also free up a building in Whitehall for the use of the newly-created Brexit department.


Sky News says Brexiter Theresa Villiers will be leaving the cabinet, at her own request:

https://twitter.com/SkyNewsBreak/status/753554936265338880


Sky News also saying now that Jeremy Hunt will be staying on at department of health. Bad news for those junior doctors.


The drumroll of anticipation around the future of the Department of Business Innovation and Skills is growing louder, rather as it might before a public execution. Here is Chris Hope of the Telegraph:

https://twitter.com/christopherhope/status/753552701368172544

If there is any comfort, they are somewhat used to it. Civil servants still sometimes refer to it as the DTI or Department of Trade and Industry, its longest-standing form. Here is a rough timeline of its existence:

1970: formed out of the Board of Trade and Ministry of Technology
1974: Loses Energy to the Department of Energy
1974: Split into Department of Trade, Department of Industry, Department of Prices and Consumer Protection
1983: Trade and Industry reformed
1992: Energy returns to the DTI. A long period of stability begins
2007: Gordon Brown’s arrival as PM causes the Department of Business, Enterprise and Regulatory Reform to be created. So is DECC, for Energy and Climate Change.
2008: BERR is given DIUS, the Department of Universities, Innovation and Skills (which had only been in existence for a year). Becomes super-department BIS under Lord Mandelson

So it has enjoyed 8 years in this form. Universities are going, and now it looks like there is a wholesale change to rival any of those above.


It’s been less than 24 hours, but what have we learnt about the May government? The FT’s Sebastian Payne gives his early impressions:

The first hours of Theresa May’s premiership confirm she will be a breath of fresh air in Westminster. Her debut speech in front of 10 Downing Street on Wednesday focused on One Nationism, a shift away from the David Cameron years that signalled a more interventionist, possibly softer form of Conservativism. In short, a less austere, more caring government.

Appealing to those who feel “left behind”, the finger prints of Nick Timothy, her chief of staff, were all over the address. His piece for ConservativeHome on working class conservatism shows the direction he and the prime minister plan to take.


It’s official.


The Telegraph’s Christopher Hope also provides some insight into how John Whittingdale is handling his sacking from cabinet:

https://twitter.com/christopherhope/status/753555684164263936


The new home secretary Amber Rudd is already out being home secretary.

https://twitter.com/metpoliceuk/status/753556374357938176


Appointment klaxon Baroness Natalie Evans has been made Leader of the Lords, says the BBC. She’s only 40.


Jeremy Hunt has taken to Twitter to confirm he’s staying put:

https://twitter.com/Jeremy_Hunt/status/753560479658901504


The FT’s Westminster team says there’s speculation – still unconfirmed – that transport could also be rolled into the new merger of the business and energy departments, making one secretary of state for all infrastructure.


A good dissection from Schoolsweek of the claims that Justine Greening is the first education secretary to have attended a comprehensive school.

Editor Laura McInerney says this is mostly true, but there are a few important caveats:

First, “comprehensive” is not the same as “state-educated”. Many other education secretaries attended state-funded schools but, in every case, they attended a grammar school.

Second, “comprehensive” is a word typically related to secondary schools, so primaries are counted out.

This includes Alan Johnson, famous for leaving school at 15 to become a postman, and Estelle Morris, whose school converted to becoming a comprehensive in her final years there. In that latter case, you could argue she attended a school labelled as a comprehensive for a short period, but given her entire cohort – and most of the school – will have been a grammar one, it’s splitting hairs, and it certainly isn’t the case she was comprehensively educated.

A second issue is David Blunkett. He attended the Royal School for the Blind, an all-ability state-funded school. When I interviewed him he talked about the school as a comprehensive, given that children there were of all abilities. It is, however, technically a special needs school – and is defined as such by the Department for Education.

More here.


While the home secretary is out doing home secretary things, Boris Johnson has been addressing the staff at the FCO.

https://twitter.com/SMcDonaldFCO/status/753562186308587520


Meanwhile staff at the Independent have put together a map of countries Boris Johnson has offended. It covers quite a lot of the world.


During the very short leadership campaign, Theresa May signalled quite clearly that she intended a different economic emphasis from the course pursued by George Osborne. At the heart of this is fiscal policy. Osborne, remember, intended to achieve an absolute fiscal surplus: translation, this means no borrowing, not even for capital.

He abandoned the idea in the weeks after Brexit, but only because a likely economic slowdown made the target impossible to achieve.

The new Chancellor Philip Hammond is seen as rather dry, but the as the FT reported earlier, not averse to reconsidering the fiscal path.

Now ITV news is reporting that Hammond is considering what is usually seen as a centrepiece of Labour policy: borrowing to invest. But he hedges his words somewhat.

“Borrowing when the cost of money is cheap has some great attractions, but this country is already highly indebted and we need to be very careful about the signal we send to markets about our intentions, so it’s about getting the balance right and making sure that we borrow and invest wisely where we can make big impacts on Britain’s productivity and thus get a return on that investment that will be to the benefit of the Exchequer.”


They used to meet in Downing Street. Now they meet in Lisboa Patisserie. The Daily Mail reports David Cameron and George Osborne were spotted this morning picking over the collapse of their political careers over coffee near Notting Hill.

https://twitter.com/DailyMailUK/status/753556708341977088

The Mail also reports that the Cameron family are staying in a £17m, seven-bedroom property in Holland Park owned by Sir Alan Parker, founder of PR firm Brunswick (pictured below).

An aide said the Camerons are expected to stay in Sir Alan’s property ‘for a few days and then moving on’, presumably until Nancy, 12, Elwen, 10, and Florence, five, finish the school year.


I’ve written a quick insight into the Bank’s bold lack of an interest rate move at midday today.

The term “bold” here should be interpreted the same way Sir Humphrey intends “courageous”. Not doing anything when the economy suddenly brakes is a shock. Do they know something we don’t?

Perhaps this is all wait-and-see, combined with a certain squeamishness around instigating a dramatic change in monetary stance on the day of a cabinet reshuffle. Perhaps they intend to act once more survey data are in, perhaps in August. And perhaps they are right but at times when the macroeconomy is difficult to gauge, but possibly changing fast, doing nothing is for once a remarkably bold move.


Emoticon Work and Pensions Secretary Stephen Crabb has resigned from Government “in the best interests of my family”


Stephen Crabb has resigned, and is now one of the more extreme examples of how quickly a politician can rise, rise and then plummet.

In May he was promoted to the Department of Work and Pensions from the lowlier position of Welsh secretary, following the resignation of Iain Duncan Smith. Just two weeks ago Mr Crabb was a credible candidate for Conservative Leader, and therefore prime minister. A committed Christian, he was seen as capable, likeable and with the sort of working class background that the Conservatives need to help occupy the middle ground.

While never close to being the favourite for the leadership, Crabb was quite seriously talked about as a next prime minister but one, someone who just needed to be tempered in high office for a little while.

The downfall was brutal. He pulled out of the race after the first round of voting, and endorsed Theresa May, a shrewd move given the impossibility of two Remain candidates reaching the final two. But then on July 9th The Times carried a story that Mr Crabb had indulged in some risky Whatsapp messaging with a young lady.

Now he has emerged from Number 10 with no job. We do not yet know what other job he may have been offered, or whether the scandal itself was decisive. And politicians can make comebacks. But for Stephen Crabb the past three months have been an astonishing switchback ride.


There are still one or two big beasts left for Theresa May to place in this reshuffle, and arguably the biggest is Chris Grayling. The BBC has reported that the Leader of the Commons is inside Number 10.

Leader of the Commons is one of those posts people are given when they are on their way out. Grayling’s fortunes were transformed by the referendum: he led the Brexit side and then immediately went over to the side of remainer Theresa May, leading her leadership campaign.

He should surely be in line for a big job – maybe this super ministry that is widely rumoured?


Not since 2010 has there been such a shakeup of government ministers. The government website cannot keep up.

If I were to put money on any of them staying put, my money would be on David Mundell MP, the Secretary of State for Scotland. Scottish MPs that are not from the SNP are rather thin on the ground.


Appointment klaxon Chris Grayling has been appointed Transport Secretary


Jack Lew, the US treasury secretary, was earlier spotted being greeted by Philip Hammond, which means he hast met his second UK Chancellor in two days, as Ed Conway of Sky observes:

https://twitter.com/EdConwaySky/status/753582085135368192


Lew has just arrived in London from Berlin and is urging flexibility on both sides of the Brexit talks, Reuters reports:

U.S. Treasury Secretary Jack Lew urged European Union and British officials to be pragmatic and flexible in talks on Britain’s departure from the EU, and said he would meet new chancellor Philip Hammond later on Thursday.

“I will be meeting with the new chancellor this afternoon, I look forward to it,” Lew told a news conference after meeting German Finance Minister Wolfgang Schaeuble in Berlin.

“We believe that it is in the best interests of Europe, of the United States and the global economy to end up with a result that produces a highly integrated relationship between the UK and the EU,” he said of negotiations on Britain leaving the EU.

“We think it is critical that negotiations take place in a pragmatic, transparent and smooth manner where both sides to demonstrate flexibility in order to produce results that are the right outcome,” Lew added.


Appointment klaxon Sky News is reporting that Damien Green, a close ally of Theresa May during her time as Home Secretary, has been appointed to Work and Pensions – the role Stephen Crabb held for just two months.


Appointment klaxon A week ago Andrea Leadsom was a 4-1 shot to be Conservative leader in the campaign expected to end in September. After a fairly torrid week for her, she has emerged as Secretary of State at Defra – the department of the Environment, Farming and Rural Affairs.

She was previously energy minister in DECC, where she reportedly asked if climate change was real (she says she was convinced that it was).


The appointment of Baroness Evans as leader of the Lords took one of her Conservative colleagues on the red benches by surprise. Work and Pensions Minister Lord Freud was in a middle of a debate when his mobile went off alerting him to her promotion.

He told peers he began the morning “with a whip next to me, she disappeared after a few minutes and pops up on my telephone screen as my new boss”.

Natalie Evans is a former director of the Conservative research department, and was ennobled by Cameron in 2014 taking the title Baroness Evans of Bowes Park. She is a former deputy director of Policy Exchange, a think tank. She was also chief operating officer of the New Schools Network – the organisation which ran Michael Gove’s free schools programme.


Evidence that some MPs are extremely quick off the mark, this tweet came within twenty minutes of Chris Grayling’s appointment as Transport Secretary

https://twitter.com/MarcusFysh/status/753590259628249088


Appointment Klaxon Sajid Javid, a man many once tipped to be the next Chancellor, is instead the next Secretary of State for Communities and Local Government. This is a role that Eric Pickles held down for 5 years under the coalition, and a department that historically fought hard with Javid’s old department, Business Innovation and Skills.

If Javid can bring some pro-growth attitude to what is also the Planning department, he could make a real difference to growth.


The Guardian’s Jessica Elgot has dug up comments from Andrea Leadsom, made in March this year about the fate of farming subsidies after Brexit.

https://twitter.com/jessicaelgot/status/753594596114956288

It will be very interesting to see if these commitments prove achievable, now that Andrea Leadsom is the Cabinet Minister responsible for this area. Or, indeed, these views on whether hill farms should have sheep or butterflies.


The Press Association’s Ian Jones has been looking the balance of the Remainers/Leavers in the May cabinet appointments so far. The Remainers well in the lead:

https://twitter.com/ian_a_jones/status/753592093080162304


EmoticonJames Brokenshire has been appointed Northern Ireland Secretary. This is the job previously held by Theresa Villiers, who earlier today appeared to reject a position under Theresa May. Mr Brokenshire, aptly named for his new job, was formerly immigration minister.

Notable given the Leave/Remain balance so far that Brokenshire was a Remainer, Villiers one of the few in the then-Cabinet to campaign for Leave.


EmoticonGreg Clark has been appointed Secretary of State in a reshaped Department for Business, Energy and Industrial Strategy. Theresa May went out of her way in her leadership speeches (both before and after winning) to stress the importance of industrial strategy.

He wil gain control over energy and climate policy, which had been under a separate entity since 2008.

Clark was previously Secretary of State for the Department for Communities and Local Government.

In 2010 Greg Clark produced a Tory green paper on “The Low Carbon Economy: Security, Stability & Green Growth”.

He was elected Conservative MP for Royal Tunbridge Wells in 2005.


There has been such a flurry of appointments that we think it worth a recap of what posts are yet to be filled.

International Development – assuming that department still exists as a separate entity. Previously held by Justine Greening, who is now at Education

Culture, media and sport – one of the smallest departments. The responsibility for handling relations with the BBC is usually to the fore. John Whittingdale was the incumbent, but we know he has gone.

Leader of the Commons – the role formerly held by Chris Grayling, now at Transport

Scotland – this is surely not in much doubt. There is one Scottish Tory MP

We no longer have to think about Energy – it has gone into Business. Does this mean the department for Climate Change no longer exists?


Appointment Klaxon Priti Patel goes to International Development

She was a prominent Leave campaigner, and previously employment minister.


Appointment Klaxon Karen Bradley is appointed Culture Secretary

She was previously a minister in the Home Office, and presumably gained the confidence of then Home Secretary Theresa May there. She is the first of these appointments to have us genuinely scrambling for the search-bar, though. Her MP website lists various priorities – growth, farming, the NHS and crime reduction – but nothing that explicitly links her to the culture brief.


The Mail has been right on the case of what the cabinet leavers have being doing in starting their new lives. After revealing David Cameron and George Osborne met for coffee in Notting Hill this morning, it now reports Michael Gove was spotted shortly after his sacking, browsing through Waterstone’s book shop.

The Mail adds:

One of the books he flicked through was Blood Wedding by Pierre Lemaitre.

It is described as a ‘dark psychological thriller’ that tells the story of a character who is ‘haunted by the things she can’t remember – and visions from the past she will never forget’.

https://twitter.com/DailyMailUK/status/753594675802546176


It is fair to say Boris Johnson’s appointment as foreign secretary has not been met with universal, unqualified acclaim. AP have collated some reaction from around the globe:

“You saw what his style was like through the campaign? He lied a lot to the British. Now it’s him with his back against the wall to defend his country and to clarify his relationship with Europe.” — French Foreign Minister Jean-Marc Ayrault on Europe-1 radio.

“Boris Johnson is a crafty party politician who managed to use the Euroskeptic mood for himself. But completely different political tasks now stand at the forefront: this is about taking foreign policy responsibility beyond Brexit.” — German Foreign Minister Frank-Walter Steinmeier to Germany’s Bild am Sonntag newspaper.

“We in Germany have had good experience with putting comments made during a campaign into the file for election campaigns, and forgetting them, on the day after the democratic decision has been made. So I don’t know what you’re talking about.” — German Finance Minister Wolfgang Schaeuble, in Berlin, when asked about previous undiplomatic comments by Johnson.

“The burden of his current position will undoubtedly, certainly, lead him to use a bit different rhetoric, of a more diplomatic nature.” — Dmitry Peskov, spokesman for Russian President Vladimir Putin, to reporters in Moscow.

“The Cabinet works collectively and we have got a range of different characters and a range of different styles and a range of different talents. The lead and the tone will be set by the prime minister.” — New British Treasury chief Philip Hammond, Johnson’s predecessor as foreign secretary, on BBC radio.

“I wish it was a joke, but I fear it isn’t.” — Former Swedish Foreign Minister Carl Bildt on Twitter.

“The Secretary and Foreign Secretary Johnson agreed that the U.S.-U.K. special relationship is as essential as ever, and they pledged to work closely together as NATO allies to address the full range of challenges we face and to meet our responsibilities around the world. The Secretary stressed U.S. support for a sensible and measured approach to the Brexit process and offered to stay engaged as the U.K. government develops its plans.” — U.S. State Department spokesman John Kirby in a statement after Secretary of State John Kerry spoke with Johnson.

“He is welcome as any minister.” — EU Competition Commissioner Margrethe Vestager.


Appointment Klaxon Gavin Williamson, MP for South Staffordshire, becomes Parliamentary Secretary to the Secretary, or Chief Whip


From the DJ booth to Number 11 Downing Street? Reports have been circulating that the new chancellor of the exchequer Philip Hammond had a goth phase as a young man. Now Popbitch – the celebrity gossip email newsletter and website – reports he also dabbled as a DJ.

Young Hammond was also the owner of a mobile disco, which he ran around Shenfield and surrounding areas in Essex.

He owned a set of decks and a PA, and went halves on the door proceeds with the classmate who was the DJ: Graham Norton.

(Not that Graham Norton, sadly. Another one.)


The UK’s new foreign secretary has been speaking….Boris Johnson told reporters that Britain could play an even greater role in Europe despite voting to leave the EU, a view he said was shared by the US.

“There’s a massive difference between leaving the EU and our relations with Europe, which if anything I think are going to be intensified,” said Mr Johnson (pictured above talking to foreign office staff). More from Reuters:

“I was very pleased to receive a phone call from Secretary (John) Kerry of the United States who totally agreed with that analysis. His view was that post-Brexit and after the negotiations, what he really wants to see … is more Britain abroad, a greater global profile.”

Johnson, a leading figure in the campaign for Brexit, has a history of using undiplomatic language about international figures including U.S. President Barack Obama and Democratic presidential candidate Hillary Clinton, whom he once likened to “a sadistic nurse in a mental hospital.”

His appointment was met with dismay across Europe’s political class, with French Foreign Minister Jean-Marc Ayrault accusing him of lying during the EU referendum campaign.

“The French foreign minister has sent me a charming letter just a couple of hours ago saying how much he looked forward to working together and to deepening Anglo-French cooperation,” Johnson said.

“After a vote like the referendum result on June 23, it is inevitable there is going to be a certain amount of plaster coming off the ceiling in the chancelleries of Europe. It wasn’t the result that they were expecting. Clearly they are making their views known in a frank and free way.”


A better picture now of Philip Hammond meeting US Treasury Secretary Jacob Lew outside No.11 Downing Street:

https://twitter.com/hmtreasury/status/753612601934942208



The Engineering Employer’s Federation, the EEF, calls itself the organisation for manufacturers, and is clearly a key audience for Theresa May’s industrial strategy – whatever that ends up being.

They have put out a press release welcoming what they have seen so far.

“Now that energy and business policy are merged, we have the makings of an industrial strategy that will focus on UK competitiveness and will provide support to our sector as it seeks to overcome the challenges and seize opportunities from the decision to leave the EU.

Having “Industrial Strategy” within the very name of the department now headed by Greg Clark is clearly a statement of intent. The appointment of Greg Clark is also interesting. Under the Coalition he assumed the role of Cities Minister, which meant one foot in Business, the other in Local Government. He was the author of the government’s Localism Act before that.

Intriguingly, Clark was also a special adviser in the Conservative government when Michael Heseltine was overlord of industrial matters, and perhaps picked up a liking for the interventionism of Heseltine there. The now Lord Heseltine was influential under the coalition with a report in 2012 that attempted to relaunch a brand of industrial strategy.

Greg Clark connects many of the threads around this important subject. He even now holds sway over energy policy – a key concern of the manufacturers. So, all in all, every reason for the EEF to sound welcoming.


Appointment Klaxon No big surprise here: David Mundell remains Secretary of State for Scotland.

Mundell is the only Tory MP representing a Scottish constituency.


Appointment Klaxon Two more appointments just in: David Lidington is Leader of the House of Commons and David Gauke becomes Chief Secretary to the Treasury replacing Greg Hands.


Handy list of Greg Clark quotes on climate from CarbonBrief here as he becomes head of the newly formed Department for Business, Energy and Industrial Strategy.

And here is his statement on assuming the post



Well that’s a wrap of today’s blog. In a whirlwind of appointments Mrs May has cleared out almost all of the Cameron cabinet with few exceptions, notably Jeremy Hunt the health secretary. Here’s our handy list of who’s who in the new cabinet.

The last appointment this evening was Ipswich MP Ben Gummer to Minister for the Cabinet Office.

Updated news will be available on FT.com