Pound punished again as business battle over Brexit impact heats up

Sterling trades below $1.39 – weakest level  for currency versus greenback since 2009

Ben Chu
Deputy Business Editor
Thursday 25 February 2016 08:33
Sterling dipped below $1.39 in trading, its lowest level since 2009
Sterling dipped below $1.39 in trading, its lowest level since 2009

The pound was pummelled to a fresh seven-year low against the dollar yesterday, as surging fears of a possible “Brexit” prompted traders to dump the UK currency.

Sterling dipped below $1.39 in trading, its lowest level since 2009. This followed Monday’s brutal session, when the currency lost more value than on any single day since 2010.

Analysts from HSBC predicted the pound could fall by as much as 20 per cent if the UK does ultimately vote to leave the European Union on 23 June, while GDP growth could be cut in half. The next major landmark for sterling is $1.37. If the pound falls below that level, it will be at lows against the dollar not hit since 1986.

The currency turmoil came as a host of business leaders waded further into the Brexit debate, following the letter to The Times earlier this week from 200 of them warning that leaving the EU would deter investment and threaten jobs.

Tom Enders, the chief executive of Airbus, which employs 16,000 people in Britain, said: “If Britain leaves, I cannot imagine that this would have positive consequences for our competitiveness.” The manufacturer’s UK boss, Paul Kahn, added that Brexit could mean more, not less, red tape for EU states wanting to do business with the UK.

That negative view was echoed by Manny Roman, the chief executive of the London-listed hedge fund Man Group. “Whilst it is hard to say exactly what the impact would be, the uncertainty and potential negative consequences of Brexit for the UK’s economy should not be underestimated,” he said.

By contrast, some high-profile UK hedge fund managers such as Crispin Odey of Odey Asset Management have donated money to the “out” campaign. Fund manager Neil Woodford took the middle road in an interview yesterday: “There is no economic case either for the UK to stay in or leave the EU,” he said. “Ultimately the debate will come down to politics – it’s about sovereignty, political allegiances, ideology and immigration.”

There were different views expressed by businesses in the hospitality industry. The board of Whitbread, which owns the Costa Coffee brand, issued a statement warning that “the uncertainty arising from a vote to exit and the subsequent potentially lengthy negotiations could negatively affect consumer confidence and the general economic outlook in the UK, which would be both unwelcome and potentially damaging to our business.”

Tim Martin, founder of the Wetherspoons pub empire and a long-standing advocate of withdrawal, weighed in on the side of Brexit: “It makes no sense, in the UK, for sensitive issues to be decided on by faceless bureaucrats in Brussels, “ he said.

But Mr Martin acknowledged that his business had done well, thanks to the influx of Europeans into the UK: “I strongly believe that the UK has been a big beneficiary of the migration of large numbers of Europeans to this country, as, indeed, we have benefited from an influx of people from other regions of the world.”

Ryanair today launches a new campaign in support of remaining a member. A stylised Union flag shows one

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments