Britain’s Finance Minister Philip Hammond has pledged to ensure the country’s economy does not suffer amid Brexit negotiations, even as the pound sterling slipped to its lowest level against the U.S. dollar in three decades.
The recent disclosure by Prime Minister Theresa May that she would push for Britain to exit the European Union by the end of March has caused a stir among traders. More worrying for many people is the considerable emphasis she placed on the restriction of movement across the borders, which experts believe would further worsen trading relationship with the EU. May’s speech on Sunday practically did little to win over already-worried investors.
Addressing his ruling Conservative Party on Monday, Hammond however tried to reassure businesses and consumers that necessary steps would be taken to protect them from what could come after the Brexit. He said voters did not chose to become “poorer or less secure” when they chose to exit the EU in the June referendum.
“Throughout the negotiating process, we are ready to take whatever steps are necessary to protect this economy from turbulence,” Hammond told the Conservative Party’s annual conference in Birmingham.
The decision by Britons to vote for an exit from the EU in the June 23 referendum came as a surprise to many business executives and investors. It led to the largest ever one-day slump in the value of the sterling against the dollar.
The currency, which recently recorded its longest streak of quarterly losses since 1984, lost more ground on the dollar following Sunday speech by the UK prime minister. Sterling skidded to its lowest level against the dollar in over 30 years on Tuesday, as investors fear the economy may be heading for hard times after the Brexit.
In addition, the UK currency has fared poorly against the euro, hitting a three-year low against the Euro area currency.
Hammond said businesses, investors and consumers should expect experience a somewhat rollercoaster experience while the negotiations are ongoing. He disclosed his expectation of fluctuation in confidence until when a final, suitable agreement is reached. Necessary support will be provided to British businesses when the negotiation process is over to enable them adjust to being outside the regional body, the finance minister pledged.
May does not want to be drawn into the talk of a hard Brexit, dismissing the possibility in its entirety. However, experts believe choosing to exit the single market for greater control over immigration points at nothing other than turbulent times in the economy.
The slump in sterling value has been driven by this concern of a hard Brexit, which will almost certainly harm the country’s trading position. It could discourage investment coming into the economy from overseas. Many investors are drawn to the economy mainly by the UK’s preferential access to the European common market.
Hammond has reiterated his intention to push back the achievement of his predecessor George Osborne’s target of a budget surplus by 2020. He prefers budget consolidation plans to be balanced with investment in infrastructure.
The finance minister was one of those that pushed for the Britain to remain in the EU prior to the referendum.