It turns out that ‘Brexit’ does indeed mean ‘Brexit’….and the markets really didn’t take the news well.
It’s been a bumpy ride for the Pound Sterling since the British people voted to leave the EU in the referendum in June.
But any illusions that it could somehow be some soft exit from the single market were smashed by Theresa May in a speech at the Conservative Party Conference at the weekend.
The Prime Minister unveiled her timetable for triggering Article 50 which will set the wheels in motion for hauling Britain out of the EU in two years.
May is aiming to kick-start the big pull out by March next year and the news saw the arse drop out of the pound once again on Monday.
Sterling tumbled to record lows following the EU Referendum vote and hasn’t recovered since. But May’s speech sent the currency plummeting to within an inch of its lowest level against the Dollar for 31 years.
If the cold, hard figures don’t sum it up, then this graph will…
Markets thought Brexit didn't mean Brexit pic.twitter.com/USP53UnTgZ
— John Rentoul (@JohnRentoul) October 3, 2016
May’s speech signalled to the markets that its full steam ahead towards ‘hard Brexit’ – basically the new PM is unwilling to sign a deal that will limit Britain’s ability to curb immigration in exchange for full access to the single market for British business.
Obviously that wasn’t going to go down well with the markets so it’s hardly surprising the pound dropped off a cliff.
“The decline in sterling is another reminder that the market doesn’t like the uncertainty that Brexit is bringing, that the negotiations will be hard and that the probability of a hard Brexit has increased,” said Charles St Arnaud, Nomura FX strategist in the Financial Times.
“It seems as if we are heading for a hard Brexit, as Theresa May revealed that control of immigration is the most important issue,” said Mikael Olai Milhøj, senior analyst at Danske Bank added. “This is likely to imply that UK financial institutions would lose the current passport access to the European internal market for financial services.”
It’s probably not going to get much better over the next few years and Chancellor Philip Hammond warned that the UK will be in for a ‘rollercoaster’ ride as Brexit negotiations begin in earnest.
‘We must expect some turbulence as we go through this negotiating process.’ he told BBC Breakfast News. ‘There will be a period of a couple of years or perhaps even longer when businesses are uncertain about the final state of our relationship with the European Union.
‘During that period, we need to support the economy to make sure that consumer confidence remains, to make sure that business confidence is stable, so that we get the investments that keeps the jobs that keep Britain going.’
What does that mean for regular JOEs like us? Well your pints are going to be more expensive on holiday and imports to Britain will cost more so you could see prices going up on things like petrol and household bills.
Brilliant news.
Why not cheer yourself up by watching the latest episode of Football Friday Live right here…
