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Pound drops to lowest level in two years amid no-deal Brexit rhetoric Pound drops to lowest level in two years amid no-deal Brexit rhetoric
(32 minutes later)
The pound has slumped to a 28-month low as investors react with concern to the escalation of no-deal rhetoric by Boris Johnson’s government. The pound has slumped to a 28-month low as investors reacted with alarm to the escalation of no-deal rhetoric by Boris Johnson’s government.
Sterling dropped below $1.23 against the US dollar and fell sharply against the euro to below €1.10 on the international currency markets on Monday, as cabinet ministers ramped up their warnings over a no-deal Brexit. Sterling dropped below $1.23 against the US dollar and fell sharply against the euro to below €1.10 on the international currency markets on Monday, as cabinet ministers began meetings to prepare for a no-deal Brexit.
As the pound lurched downwards, an array of leading business groups lined up to voice exasperation that a lack of information from the government was hampering preparations for no-deal. But while the pound suffered, there was confusion from Johnson’s government about whether a no-deal Brexit is the main working assumption. The prime minister himself insisted there was an “assumption that we can get a new deal” and that he wanted to reach out to European leaders.
Echoing a warning from the Confederation of British Industry at the weekend that Britain stands ill-equipped, lobby groups representing firms employing millions of people across the country sounded the alarm. However, his deputy official spokeswoman reinforced the position of Michael Gove, the cabinet lead for no-deal preparations, that “we must assume that there will be a no-deal Brexit on 31 October” unless EU leaders agree to reopen talks on the withdrawal agreement. The spokeswoman also made clear Johnson would not be meeting EU leaders until they agree to make a new deal that does not involve the Irish backstop.
The Federation of Small Businesses (FSB) said the lack of preparedness among its members was “frightening”, while the British Chambers of Commerce (BCC) said industry’s questions about how to prepare had “gone unanswered”. As the pound lurched downwards on Monday, an array of leading business groups lined up to voice exasperation that a lack of information from the government was hampering preparations for no deal.
The Institute of Directors (IoD) said guidance from government had been “partial” and was yet to be properly road tested. Echoing a warning from the Confederation of British Industry at the weekend Britain is ill-equipped for a disorderly EU departure, lobby groups representing firms employing millions of people across the UK sounded the alarm.
The pound fell by more than 1.3% against the US currency to trade at about $1.2216 to the lowest since , extending a slide under way over recent months as the chance of the UK crashing out of the EU at the end of October mounts. The pound was down by a similar amount against the single currency at €1.0965. The Federation of Small Businesses (FSB) said the lack of preparedness among its members was “frightening”, while the British Chambers of Commerce (BCC) said industry’s questions about how to prepare had “gone unanswered”. The Institute of Directors (IoD) said guidance from government had been partial and was yet to be properly road tested.
The pound fell by more than 1.3% against the US currency to trade at about $1.2216, its lowest point since March 2017, extending a slide under way over recent months as the chance of the UK crashing out of the EU at the end of October mounts. The pound was down by a similar amount against the single currency at €1.0965.
Analysts said comments from senior figures in Johnson’s cabinet had rocked the City, including a suggestion from Dominic Raab on Monday morning that the UK would be in a better place to negotiate a good deal with the EU after no-deal Brexit.Analysts said comments from senior figures in Johnson’s cabinet had rocked the City, including a suggestion from Dominic Raab on Monday morning that the UK would be in a better place to negotiate a good deal with the EU after no-deal Brexit.
The foreign secretary told BBC Radio 4’s Today programme that the EU’s “stubborn” behaviour would be responsible if the UK left without an agreement with Brussels at the end of October.The foreign secretary told BBC Radio 4’s Today programme that the EU’s “stubborn” behaviour would be responsible if the UK left without an agreement with Brussels at the end of October.
Petr Krpata of the City bank ING said: “The market [is] awaking to the reality of a new UK government, its rather combative stance on the current EU-UK Brexit deal, and its open remarks on the rising probability of a no-deal Brexit.”Petr Krpata of the City bank ING said: “The market [is] awaking to the reality of a new UK government, its rather combative stance on the current EU-UK Brexit deal, and its open remarks on the rising probability of a no-deal Brexit.”
Over the weekend, several key figures in Johnson’s government said the prime minister was “turbo-charging” preparations for no deal. Michael Gove, the new cabinet minister in charge of planning for such a scenario, said the government was operating on the assumption of leaving without a deal. Joshua Mahony, senior market analyst at financial trading platform IG, said: “With two months until the October deadline, there is reason to believe that the pound has plenty more downside to come.”
Over the weekend, several key figures in Johnson’s government said the prime minister was “turbo-charging” preparations for no deal. Sajid Javid, the chancellor, is expected to ramp up spending on no-deal readiness by about £1bn this week and the government is preparing to spend around £100m on a public information campaign for citizens and businesses using broadcast media and billboards.
Hitting holidaymakers in the pocket as they head abroad during the school holidays, the pound has sunk by more than 10 cents against the dollar from a peak in excess of $1.33 in March. Against the euro it has fallen by more than 7 cents from a high of €1.17 recorded in May.Hitting holidaymakers in the pocket as they head abroad during the school holidays, the pound has sunk by more than 10 cents against the dollar from a peak in excess of $1.33 in March. Against the euro it has fallen by more than 7 cents from a high of €1.17 recorded in May.
The BCC, which represents 75,000 businesses employing 6 million people, called on the government to “up the ante” on no-deal preparations. The BCC, which represents 75,000 businesses employing 6 million people, called on the government to up the ante on no-deal preparations.
“The 31st October deadline is fast approaching and businesses are being told to prepare for no deal, but there are still significant areas where there is simply little basis on which to plan,” said Claire Walker, co-executive director of the BCC. “The 31 October deadline is fast approaching and businesses are being told to prepare for no deal, but there are still significant areas where there is simply little basis on which to plan,” said Claire Walker, co-executive director of the BCC.
“Business communities want the government to make every effort to avoid no deal, but at the same time, urgently need it to up the ante on its planning to enable firms to prepare for all scenarios.”“Business communities want the government to make every effort to avoid no deal, but at the same time, urgently need it to up the ante on its planning to enable firms to prepare for all scenarios.”
The FSB urged the government to “put its money where its mouth is” by handing £3,000 “Brexit vouchers” to small firms that trade overseas, to help them pay for advice on navigating custom and tariffs.The FSB urged the government to “put its money where its mouth is” by handing £3,000 “Brexit vouchers” to small firms that trade overseas, to help them pay for advice on navigating custom and tariffs.
Edwin Morgan, interim director general of the IoD, also called for firms to be issued with Brexit vouchers and criticised the lack of detail from government.Edwin Morgan, interim director general of the IoD, also called for firms to be issued with Brexit vouchers and criticised the lack of detail from government.
“We have long urged our members to make any preparations they can for no deal, but many smaller firms simply haven’t had the time or money to spend on getting ready for something that has not been, and still isn’t, government policy,” he said.“We have long urged our members to make any preparations they can for no deal, but many smaller firms simply haven’t had the time or money to spend on getting ready for something that has not been, and still isn’t, government policy,” he said.
Make UK, the trade body for manufacturers, said many firms had already spent money preparing for the original Brexit date in March and might now struggle to raise more cash. Make UK, the trade body for manufacturers, said many firms had already spent money preparing for the original Brexit date in March and might struggle to raise more cash.
“Warehousing costs have increased enormously and October is a time when capacity is already pre-booked by retailers for Christmas,” said Ben Fletcher, executive director of communications, government and policy.“Warehousing costs have increased enormously and October is a time when capacity is already pre-booked by retailers for Christmas,” said Ben Fletcher, executive director of communications, government and policy.
“It’s going to be more expensive for businesses that struggled to prepare in the spring.”“It’s going to be more expensive for businesses that struggled to prepare in the spring.”
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