Sterling hit a new record low against the euro this week after Prime Minister Theresa May announced she start Britain’s Article 50 exit from the EU within the next six months.
The negotiations that follow are expected to take at least two years, meaning that businesses face a minimum of two and a half years of uncertainty. At the same time Ireland’s Minister for Foreign Affairs and Trade Charlie Flanagan said he fears a return to a ‘hard Border’ with Northern Ireland may be inevitable despite encouraging remarks from UK ministers.
Northern Ireland’s Deputy First Minister Martin McGuinness said he found the Prime Minister’s Brexit plans “disturbing” and protested that Northern Ireland did not want to be dragged out of the EU.
“It’s quite clear that whenever the negotiations begin, if they do begin in March of next year, that the British government are faced with a very tough negotiation. So I think we’re headed to a head-on collision between the British government negotiators and European Union,” he said. Mindful of the widespread uncertainty and derision for “Brexit means Brexit” Prime Minister Mrs.
May and her chancellor Philip Hammond tried to calm that uncertainty at their Tory Party conference in Birmingham this week by announcing plans to invest in housing and infrastructure including £5 billion to encourage small builders to develop brownfield sites.
Mrs May dismissed suggestions that the UK faced a choice between a so-called “soft” and “hard” Brexit but the timetable she announced was immediately taken by investment banks, incuding JP Morgan, to mean a “hard” Brexit is imminent with Britain abandoning the EU’s customs union and membership of the single market, opting instead to restrict free movement and immigration. President of the European Council Donald Tusk said he welcomed the “clarity” given by Mrs. May’s remarks.
Mr Hammond said people should prepare themselves for some turbulence but distanced himself from his predecessor’s plans to cut UK debt, promising to borrow to invest. The result was mixed signals as the Stock Exchange’s FTSE 100 hit a 16 month high and companies purchasing managers recorded increases while sterling fell to a four year low.
At the start of this week a euro was worth 87 pence, similar to the record low to which it plunged just after the Brexit Referendum in June.
Ireland’s Foreign Minister Charlie Flanagan said Brexit is the greatest foreign policy challenge to Ireland since it joined the European Economic Community (EEC) 43 years ago. He said he welcomed the clarity Ms May has given the situation by naming a date for triggering Article 50.
“Our priorities here are quite clear – the economy, the fact that we have in excess of €1.2 billion trade with the UK every week, and obviously the situation regarding Northern Ireland.
“The preservation and maintenance of the Common Travel Area which we have enjoyed with the UK since the foundation of our State and of course the fact that we still remain active members of the European Union.”
He said the Border would actually be decided by 27 members of the EU.