Boris Johnson's Brexit plan helps send pound and stock market tumbling

PM's latest proposal set to be rejected by EU

Olesya Dmitracova
Economics and Business Editor
Thursday 03 October 2019 07:58
Boris Johnson sets out 'compromise' Brexit proposals to Brussels

UK shares and the pound have fallen, battered by jitters over Boris Johnson’s Brexit endgame and fears for the world economy after disappointing factory data out of the US.

The pound lost as much as 0.6 per cent in the morning before recovering later in the day. By 4.25pm, the pound was broadly flat at $1.2309. Against the euro, it was 0.14 per cent lower, at €1.1240.

Reports emerged late on Tuesday that Mr Johnson’s final Brexit proposal would likely create a regulatory border between Great Britain and Northern Ireland until 2025 and require border checks between Northern Ireland and the Republic of Ireland.

EU diplomats and officials responded to the report on Wednesday, saying the proposal “won’t fly”.

In a keenly awaited speech later in the day, Mr Johnson provided few details of his latest Brexit plan. He said it did not involve customs infrastructure at the border.

“We will under no circumstances have checks at or near the border in Northern Ireland,” he said.

Across the Atlantic, a measure of US manufacturing recorded its worst reading since June 2009 in September, according to a release on Tuesday.

“The slump in the ISM manufacturing index to a decade low of 47.8 in September, from 49.1, will reignite fears that the US economy is headed for a recession,” said Paul Ashworth, chief US economist at Capital Economics.

Wednesday’s slide in the FTSE100 index of the most valuable companies listed on the London Stock Exchange was particularly dramatic. By 4.25pm it had lost 3.1 per cent.

All but two stocks in the FTSE100 index were down. One of the exceptions was Flutter Entertainment, formerly known as Paddy Power. Its shares soared after news that it will merge with Poker Stars, creating one of the world’s biggest online betting and gambling companies.

Tesco’s shares were also slightly higher on the day after the supermarket chain reported a healthy rise in first-half profits.

Additional reporting by Reuters

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