Pound falls as report says EU officials considering placing economic sanctions on Britain post-Brexit
Theresa May leads a cabinet meeting at Chequers – the Prime Minister’s country retreat in 2016
The Pound fell against the single currency today off the back of a report that said EU officials in Brussels were considering placing economic sanctions on Britain after Brexit, alongside the release of new data which showed the U.K. construction sector was struggling.
The Financial Times report said measures published on Thursday showed the EU wanted safeguards after the U.K. leaves to preserve a “level playing field” and to counter the risks of Britain lowering its tax rates or relaxing regulation for businesses in order to make it a more competitive economy.
The report also stated officials in the British government were considering striking a deal with the EU which would keep part of the economy in the single market (customs union) to limit trade losses.
Trade secretary Liam Fox said this aspect of the report was untrue, and that they were not considering a deal to keep the U.K. in the customs union post-Brexit. Fox said: “It is very difficult to see how being in a customs union is compatible with having an independent trade policy.” He added, “We have to be outside of that to take advantage of those growing markets.”
In other bad news, fresh data showed the U.K. construction sector ground to a halt in January. IHS Markit’s purchasing managers’ index for the construction industry fell to 50.2 for last month falling from 52.2 for December 2017. Anything below 50 indicates a contraction in the sector.
Meanwhile, British Prime Minister Theresa may said today that a transition deal between the U.K. and EU would be reached within 7 weeks, in a statement that was designed to ease fears that negotiations were reaching another deadlock over trade.
The words came as she was set to conclude a 3-day visit to China, where she met Chinese leader Xi Jinping and agreed a joint trade and investment review with the country that would lead to £9 billion in business deals for the U.K. after Brexit.
GBP moves lower February 2nd
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