Interior minister Theresa May opened up a commanding lead over her nearest rival, Andrea Leadsom, on Tuesday in the contest to become Britain’s next prime minister, but the race was overshadowed by post-Brexit carnage for property investors and the pound.
In a first ballot of Conservative members of parliament, May won 165 votes and Leadsom, a junior energy minister, won 66, increasing the likelihood that Britain will get only its second woman prime minister after Margaret Thatcher.
Former defence minister Liam Fox won the fewest votes, 16, and was eliminated from the battle to replace David Cameron, who has said he will step down after Britons voted in a June 23 referendum to break away from the European Union.
The drawn-out selection process, in which justice minister Michael Gove won 48 votes and works and pensions minister Stephen Crabb 34, will ultimately be decided by about 150,000 Conservative party members in September, once MPs have whittled the field down to two candidates.
But signs are already multiplying that concern about the impact of Brexit on trade, investment and business confidence are starting to hit the economy.
Three British commercial property funds suspended trading within 24 hours as too many investors tried to pull out their money at the same time.
Shares plunged in other property-related funds, and asset managers and insurers were also hit.
The pound, which has borne the brunt of market concern about potential damage to the economy, plumbed new 31-year lows. By late afternoon it was more than 12 per cent down since the referendum.
“There is evidence that some risks have begun to crystallise. The current outlook for UK financial stability is challenging,” the Bank of England said, announcing measures to encourage banks to keep lending.
Voters were bombarded in the run-up to the referendum with warnings from Cameron and a host of financial institutions and think tanks that Brexit would plunge Britain into a self-inflicted recession by jeopardising its access to the EU’s tariff-free single market.
The Leave campaign derided such arguments as ‘Project Fear’, arguing Britain would prosper by regaining ‘independence’ from Brussels and freeing itself to set its own laws, clinch its own trade deals and set a cap on immigration – something it cannot do under EU rules allowing free movement throughout the bloc.