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12 July 2016
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May Day

Can the incoming prime minister offer some comfort to the infrastructure market?

After some of the most tumultuous weeks in British politics for a generation, some clarity is beginning to emerge – and much sooner than expected.

After energy minister Andrea Leadsom pulled out of the Conservative leadership race, Theresa May’s move from the Home Office to Number 10 Downing Street became something of a coronation, and in this fevered world of frenetic activity, it was perhaps no surprise that we went from expecting a new leader sometime in the autumn to sometime on Wednesday within a matter of hours.

But what will the new prime minister mean for Britain and its infrastructure market?

On first assessment, it is perhaps hard to see what May will bring to the role outside what we already know about her from her time at the Home Office. Having spent six years at that department, her views on immigration can be pored over for some time – but questions still remain over whether she plans a Brexit amnesty for EU nationals already living here.

There seems little hope that she will look to backtrack on the EU referendum result, making clear in her first words after becoming the prime minister in waiting that “Brexit means Brexit”.

Perhaps most intriguingly, though, was May’s decision to include both infrastructure and housing in her first major campaign speech just ahead of Leadsom’s decision to quit the race. Anticipating a long battle to Number 10 with the energy minister, May was making her first pitch to the Conservative membership when she spoke of plans to expand the use of infrastructure bonds and increase the rate of housebuilding across the country.

While the sudden end to the campaign means we may not get the chance to see May flesh out those ideas in the short-term, the fact that she used infrastructure in such an important speech bodes well for the sector. Like her predecessor, May looks keen to at least talk a good game on infrastructure, and to keep it high on the political agenda.

And there is another positive, too: the swift conclusion of the race to succeed Cameron means that there is a bit more stability in the country to help reassure the markets. Rather than facing months of uncertainty, the financial markets can now relax at least a little, in the knowledge of who is going to be leading the UK through its Brexit negotiations.

It is worth noting that, whether by accident or design, it was just a day after May’s success that Siemens chief executive Joe Kaeser said his firm will continue to invest in the UK.

The big question for the market now, though, is what happens not so much in Number 10, but at Number 11. Will George Osborne remain as Chancellor?

If May decides to kick him out of his home of the past six years, a whole new wave of uncertainty will break across the infrastructure industry – particularly around the Northern Powerhouse, which many have felt has been more of Osborne’s personal ambition to create a legacy of his own rather than hard government policy.

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