Analysis: What Boris Johnson is really involved in

Well, at least Boris Johnson’s tenure as UK Prime Minister lasted longer than Neville Chamberlain’s. So, we guess that works for him.

Johnson resigned on Thursday after an endless series of ethics scandals finally turned his party against him. (And that last one is especially gross. We’ll just put a link here.)

Although Johnson’s tenure was defined by scandal, it could be argued (and we are) that Britain’s crappy economy ultimately killed him.

The UK has the highest inflation among the G7 countries, at 9.1% in May and forecast to reach 11% later this year, writes my colleague Mark Thompson. Rising food and fuel prices have created the UK’s worst cost-of-living crisis in decades: disposable incomes are on course for the second sharpest fall since records began in 1964, according to the Bank of England. And typical UK wages have not risen at all since the 2008 financial crisis, the Resolution Foundation said on Monday.

So it is no wonder that the public is not optimistic about Boris.

But why is the UK economy doing so much worse than the rest? Let’s start with Brexit, Johnson’s “distinguished” achievement. Leaving the European Union:

1. Exacerbating crippling labor shortages and increased operating costs for businesses. Check it out.
2. It has not boosted trade, as Johnson and other Brexiteers promised. Also check. Indeed, it has caused the UK to miss out on much of the post-pandemic recovery in global trade, according to a March report by the Office for Budget Responsibility, the government’s fiscal watchdog.
3. It has forced the UK to rely more heavily on foreign investment to offset the fact that the country imports far more than it exports, causing the UK’s balance of payments deficit to jump to 8.3% of GDP in the first quarter on 2022. Yes, check here too.
4. It caused the pound to collapse, driving up the price of these imports. Big time check.
5. Put the UK on the brink of a trade war with the European Union. Ugh, check.

Against this backdrop, the global economic pressures facing each country – a disrupted supply chain caused by the pandemic and a spike in commodity prices due to Russia’s invasion of Ukraine – have hurt the UK far more than its G7 allies .

A recession is looming for anyone unlucky enough to take on Johnson, as the world’s fifth-largest economy stalled in February, began to shrink in March and worsened further in April. As inflation rises, British consumers are buying less and poverty campaigners say UK households have been forced to choose between “heating and eating”. Every major sector of the economy is in reverse, according to the Office for National Statistics.

Oh, and it’s about to get worse: The U.K.’s economic outlook has “deteriorated materially,” the Bank of England said. And the Organization for Economic Co-operation and Development predicted last month that the UK economy would not grow at all next year – the worst forecast for the G7 economy next year.

So, yeah, the scandals haven’t been great for Johnson. But political leaders around the world face enormous pressure due to inflation. It turns out that people really don’t like it when they can’t afford to buy the things they want. Johnson’s scandals were the final straw for a prime minister already on paper-thin ice.

Otherwise, the Conservatives might have stuck with Johnson through thick and (mostly) thin – just as they did through the five-week suspension of parliament, the corruption allegations, the lobbying scandal and most of Partygate.

NUMBER OF THE DAY: 9

That’s the number of children we now know Elon Musk has — up from the seven the world knew before Business Insider reported Wednesday that the world’s richest man fathered twins last year with the CEO at one of his companies, Neuralink. Musk tweeted on May 24, saying, “US birthrate is below minimum sustainable levels in ~50 years,” and pinned it to the top of his Twitter account with more than 100 million followers.

GAME STOP

GameStop stock is about to get a lot cheaper.

The company’s board on Wednesday approved a 4-for-1 stock split, effective July 22. For current GameStop shareholders, the total value of their investment will remain the same, but they will own four times as many shares when all is said and done.

Depending on where GameStop stock trades in a few weeks, that should push the stock price down to $30ish — roughly where it was before the meme craze sent the stock soaring to $347 in January 2021.

Shares of the meme stock darling jumped on Thursday’s news.

GameStop (GME), like other meme stocks, has a rough 2022. The stock tanked earlier this year, though it has struggled a bit lately, notes my colleague Jordan Walinsky. Shares are down about 14% this year, reflecting a selloff in the broader market.

It’s hard to believe, but even at a third of its all-time high, GameStop may still be a bit expensive for individual investors. A drop in stock price can increase demand and create more liquidity for the company.

While deep-pocketed institutional investors are generally unconcerned by high stock prices, individual investors may be put off by extremely high prices. The growth of zero-fee trading apps, including Robinhood, E-Trade and others, has boosted demand for memes like GameStop and AMC — and helped make stock splits more attractive in recent years.

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