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Pound Plummets as Theresa May Delays Brexit Vote

LONDON — The pound took a beating late Monday afternoon as British Prime Minister Theresa May proposed delaying a key vote over the government’s proposed Brexit deal.

May had been under pressure to delay the vote, which had been set for Tuesday and which she likely would have lost by a landslide. The indefinite postponement — it may not take place until late January — caused even more turmoil in the financial markets.

Even before May took to the parliamentary podium at 3:30 p.m. local time, the pound had fallen to its lowest level against the dollar since June 2017 amid all the uncertainty over Brexit.

As she spoke — and was heckled mercilessly by members of Parliament — the pound continued to sink, falling 1.6 percent to $1.25 and 1.5 percent to 1.10 euros ($1.25).

Try as she might have, May had failed to win support for her Brexit plan, with the big sticking point the future of the border between Northern Ireland and the Republic of Ireland, an independent state and part of the European Union.

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According to May’s plan, the price of keeping the Irish border fluid is a “backstop” agreement that could potentially mean that Britain remains in the EU customs union indefinitely. Most members of Parliament refuse to accept that, arguing it defeats the whole point of Brexit and keeps Britain shackled to the EU.

May said that given MPs’ concerns, she did not want to “to divide the house at this time,” although she argued there is no deal available that does not include the backstop.

“The hard-won peace in Ireland has been built around a seamless border. Businesses operate across that border. People go back and forth across it every day. They do not want their everyday lives interrupted,” she said, adding that the EU doesn’t want a hard border either and that any backstop deal would be temporary. Few believe her.

May said she plans to visit her counterparts in other EU member states to discuss MPs’ concerns ahead of a European summit this week and warned that any deal tabled would inevitably involve compromises with the EU. The EU has already approved May’s deal and said it’s not negotiating anymore on Brexit.

May also told Parliament on Monday she can’t give a new date for the vote until the European summit. May needs Parliament’s backing for her Brexit proposal to become law. The deadline for the vote is Jan. 21, according to the BBC.

She said she has no doubt that her deal is the right one, honoring the result of the referendum. Not all agree, and the Brexit drama is reaching a new fever pitch, with multiple outcomes possible.

The decision to leave Europe could be withdrawn altogether; a vote of no confidence could bring down May and see another Tory minister take her place; a general election might usher in a Labour victory, while an extension to the Brexit withdrawal date on March 29 could bring more uncertainty and wrangling. There is also the possibility of another Brexit referendum.

As the pound fell, so did the FTSE 100, which closed down 0.8 percent to 6,721.54.

As if Brexit uncertainties were not enough to spook the country’s businesses, it appears as if Christmas will be a dreary one for brick-and-mortar retailers.

On Monday, Springboard, which delivers insights on brick-and-mortar retail activity, is forecasting that footfall will decline by 4.2 percent in December, greater than the 3.5 percent drop in December last year and due to trading challenges for retailing.

Footfall has been declining all year, according to Springboard, and in the first half of December, the drop has already reached 4.2 percent. It is not expected to improve sufficiently in the remaining two weeks to reduce the overall decline for the month.

The company said high streets and shopping centers will bear the brunt of the drop in customer activity.

“As we head into the zenith of the retail trading calendar, both retailers and consumers alike are in the midst of the greatest degree of uncertainty in recent times,” said Diane Wehrle, Springboard marketing and insights director.

She speculated that consumers may purchase now rather than later in an attempt to outrun inflationary pressures that are expected “should the Brexit deal not be ratified.”

In November, footfall fell by 3.2 percent, a significant decline on the previous year when it grew by 0.2 percent, according to Springboard.

The company said the November numbers illustrate the Black Friday effect of driving more shopping online during the period, which is also becoming longer.

“The 3.2 percent drop in footfall in November is indisputable evidence that Black Friday delivers no tangible benefit to brick-and-mortar stores,” said Wehrle.

“Whilst online shopping was inevitably more prevalent than in other months, the vast majority of spending remained in-store, and this is what Black Friday impacts adversely. Since 2013, when Black Friday became established as a key trading day, footfall has decreased in every year bar one, and the only increase in 2017 was just 0.2 percent.”

This story was reported by WWD and originally appeared on WWD.com.

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