In the early hours of Tuesday, the US Dollar faces challenges in maintaining its strength against major currencies, with the US Dollar Index struggling to surpass the 104.00 mark. Investors are eagerly anticipating the release of key economic data, including January Durable Goods Orders and the Conference Board's Consumer Confidence Index for February. Additionally, the economic calendar includes...
The End of Era: What Might the UK Face Next?
2022-11-22 • Updated
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96. She was the longest-reigning monarch in the world and made a huge contribution to the life of the United Kingdom. This event entails a lot of costs for the UK, and in times of multiple crises, it can exacerbate the situation. Let's take a look at what this might mean for the nation.
Changing Queen to King
In the UK, all banknotes and coins feature the Queen's face, but now, after her death, new coins and cash will be created with the King's face. The authorities plan to issue new cash and distribute it in general circulation, while the old money will be gradually withdrawn from circulation.
The banknote of 20 pound featuring Queen Elizabeth II
Moreover, the Royal Mail of Great Britain depicts an image of the Queen. To do this, you will also have to create new stamps with the face of the King. The cipher on all mailboxes will be changed as well - any new ones will most likely contain the cipher chosen by the new king.
The Queen's cypher appears on many uniforms in the UK, including police and military uniforms. This uniform will be updated with the new king cipher.
All British passports state: "Her British Majesty's Secretary of State asks and demands in the name of Her Majesty all who may be concerned to permit the bearer to pass unimpeded and to afford the bearer such assistance and protection as may be necessary." Therefore, new passports issued will reflect the pronouns of the new male king. However, it’s likely that passports will only need to be renewed after they expire.
All these actions to change the Queen’s symbols to the King’s will lead to the enormous expanses for the country. People continue to complain about extremely high taxes, and new British Prime Minister Liz Truss promised to lower the taxes in her election race. The necessity to increase government spending due to the the new king’s reign can complicate situation, especially under the energy crisis tensions.
Possible changes in Commonwealth countries
Queen Elizabeth was the head of the Commonwealth, which included 54 countries in Africa, Asia, America, Europe, and the Pacific. Upon her death, the position of Head of the Commonwealth wouldn’t automatically pass to the Queen's successor, but would likely be collectively chosen by the Commonwealth's heads of government. Many nations can become a republic with their own head of state.
Let's take Australia as an example. Australia formally severed legal relations with the UK in 1986 when the Australia Act was passed. The Act removed the UK's ability to legislate for any part of Australia. However, the country retained its status as Commonwealth with the British monarch as the ceremonial head of state.
Prime Minister Anthony Albanese supports Australia becoming a republic. The Queen's death has long been seen as a turning point for Australia's republican movement, with some advocates of change in the political system immediately calling for the end of the constitutional monarchy.
Adam Bandt, head of Australia's third Green Party, the country's largest political party, said: "Now Australia must move forward. We need an agreement with the indigenous peoples, and we need to become a republic."
Many other countries of Commonwealth may follow Australia’s steps.
Changes in politics
Just before the Queen's death, Truss set to work laying out her plans to tackle the UK's cost of living crisis by unveiling a sweeping stimulus package to help Britons pay their electricity bills, which have skyrocketed since Russia's war in Ukraine. This comes after a petition to boycott electricity bills began to gain momentum in the UK.
The UK central bank implemented the biggest rate hike in 27 years last month by raising its benchmark rate to 1.75% in an attempt to bring down inflation, which is currently the highest among the G-7 countries at 10.1%. Investors expected a further 50-basis-point rate hike at the next BoE meeting on September 15, but now some say the regulator will be forced to raise rates higher and faster.
The outlook is uncertain as the country faces growing recession risks. Goldman Sachs warned last week that the UK could slip into recession in the fourth quarter of this year, echoing earlier BoE forecasts.
The British pound has already been in a downtrend for the past few months, hitting a 37-year low of $1.1469 on Wednesday. Now GBPUSD has strengthened up to 1.1587.
All these factors put pressure on Prime Minister Truss and King Charles III, two new British leaders whose role will be to rally public sentiment in a time of crisis. The monarchy is also under constant criticism for being outdated and absorbing public finances. Indeed, the cost and ceremony of the Queen's funeral won’t go unnoticed in a country beset by a cost-of-living crisis.
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In the early hours of Tuesday, the US Dollar faces challenges in maintaining its strength against major currencies, with the US Dollar Index struggling to surpass the 104.00 mark. Investors are eagerly anticipating the release of key economic data, including January Durable Goods Orders and the Conference Board's Consumer Confidence Index for February. Additionally, the economic calendar includes reports...