Discussions over the UK's withdrawal from the single market has caused a fall in the pound sterling.
Prime Minister Theresa May recently outlined her plans for the Brexit negotiations, stating that the UK would invoke Article 50 by no later than March 2017. Using the term “Hard Brexit”, May also suggested that she would aim for a withdrawal from the single market and the customs union. Since the announcement, the pound suffered even more value decreases with the 31 year-low signalling that investors are worried about the consequences of Brexit on the British economy.
There was an immediate and drastic fall in the value of the pound directly following the result of the EU Referendum, with a gradual recovery in the weeks afterwards. Investor confidence in sterling is holding the currency back however, with uncertainty over how Brexit negotiations will develop being a major factor in the pound’s depressed value.
Hard Brexit and The Financial Industry
A report commissioned by TheCityUK has revealed that the financial industry could lose £38bn if the UK withdraws completely from the single market. The report also claims that as many as 75,000 jobs are at risk should Hard Brexit take place. Kevin Dowd, and economics professor at Durham University has rubbished the report as a “scare story”, saying that most financial service business takes place outside of the EU.
The BBC has more on the consequences of Hard Brexit for the UK economy here.