A possible resignation of Boris Johnson as leader of the Tory party and Prime Minister in the U.K. may lead to a reshuffle of the cabinet and the need to fill key important positions in the government and other departments like the Treasury, which would risk affecting the adoption of new rules and legislation.
On Thursday, July 7, the Prime Minister’s office confirmed that Boris Johnson will address the nation to most likely announce his resignation as leader of the party, but that he plans to remain as Prime Minister until a successor is elected in autumn, according to several media outlets. However, many policymakers in the country have questioned whether Boris Johnson could stay as interim PM during this time — or what his role as interim PM would be.
The number of resignations in high-ranked positions in public offices before Boris Johnson’s decision to step down, which some sources estimated is around 40, may have an impact on the adoption of new rules and proposed legislation. This is the case for the government’s plans to adopt crypto regulation, in particular stablecoin regulation, and a proposal to adopt new rules to regulate the Buy Now, Pay Later (BNPL) sector.
The department leading these regulatory efforts is the U.K. Treasury, which recently lost its chief Rishi Sunak — replaced by Nadhim Zahawi — and its Economic Secretary John Glen, who hasn’t been replaced yet. These are important losses for the department, and as Deputy Governor of the Bank of England Jon Cunliffe explained at an event on Wednesday, the Treasury’s plans to establish a regulatory system for stablecoins may have been delayed by “recent events,” which could refer to these resignations. These remarks were made before the PM announced his plans to address the nation.
Mr. Cunliffe suggested that the Treasury could introduce stablecoin regulation as early as August, but with a new Treasury chief and an interim prime minister, the priorities and the timing for this regulatory framework may change.
A similar situation applies to potential measures in the BNPL sector. The Treasury concluded a public consultation in January, and it released a response to this consultation on June 20. The government is planning to publish a consultation on draft legislation at the end of the year. This would be followed by another consultation to be launched by the Financial Conduct Authority (FCA) around mid-2023, where the regulator would also seek to propose new rules on this sector. Yet for the FCA to launch its own publication, the Treasury needs first to lay secondary legislation.
These plans may now change as one of the biggest proponents of BNPL regulation at the Treasury was John Glen, who recently resigned. The difficulties filling some of the empty vacancies at the Treasury and at other ministerial positions, according to some media outlets, could threaten a certain paralysis of the institutions until a new prime minister takes office.
Read more: UK BNPL Regulation Unlikely Before Mid-2023
There is still a possibility to minimize these disruptions, as one of the candidates to replace Boris Johnson as prime minister is the former chancellor Rishi Sunak, who would likely continue with his own work at the Treasury.
Some commentators have also speculated about the possibility that Boris Johnson will call for an early general election with the intention to receive a new mandate from the British people to continue. Regardless of the outcome of a new general election, if Boris Johnson were to decide to call for new elections, the Queen would be forced to dissolve the Parliament.
This would make it impossible to adopt new legislation until a new parliament is formed, which would take a few months and, depending on the result of the elections, could propose a new legislative agenda for the new parliamentary session.