Harder Brexit stance by Tory contenders hits sterling

  • Pound falls to 0.9%, the lowest level since April 2017 as no-deal concerns mount, making it the worst performing major currency against USD.
  • Paschal Donohoe, the Irish finance minister, said the prospect of a no-deal was more likely than ever “[since] the Irish government and the EU are really clear that will not be changing the content of the backstop agreement.
  • London’s FTSE 100 outperformed its continental European peers as the pound plumbed its lows, with the overseas earnings of its multinational constituents flattered when repatriated into sterling.

Tory leadership: Hunt and Johnson’s backstop remarks ‘significant’

  • Both Jeremy Hunt and Boris ruled out any compromise when they both declared at a debate that the backstop was “dead” and rejected the idea of a time limit, indicating a “huge heave” towards no deal.
  • Critics of the backstop, designed as an insurance policy to prevent a hard border on the island of Ireland after Brexit, fear that it would be used to permanently trap the UK in the EU customs union, preventing the country from striking its own trade deals.
  • The EU has repeatedly said it will not renegotiate the withdrawal agreement and insisted the backstop must be part of any deal agreed.
  • Ursula Von der Leyen – likely to be the next European Commission president – said that she is ready to extend the withdrawal date further should more time be required.

EU expected to reject outright Johnson and Hunt’s backstop plan

  • EU sources say that the next prime minister to go to Brussels with a proposal to axe the Irish border backstop from the withdrawal agreement will be told in “no uncertain terms” that it amounts to a declaration of no deal.
  • Leo Varadkar, the Taoiseach, that Ireland was prepared for no deal but he hoped it would not happen: “It will be incredibly severe on Northern Ireland because it will face tariffs … and will face huge difficulties, because a huge amount of trade from Northern Ireland goes through Dublin.”