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Boris Johnson tries to reassure on Brexit as pound slumps

Boris Johnson tries to reassure on Brexit as pound slumps
Highlights

British Prime Minister Boris Johnson visited Wales on Tuesday as part of a national tour intended to reassure Britons that his hard-Brexit push won’t hurt the economy and rip apart the U.K.

LONDON: British Prime Minister Boris Johnson visited Wales on Tuesday as part of a national tour intended to reassure Britons that his hard-Brexit push won't hurt the economy and rip apart the U.K.

Currency markets were far from reassured, however, as the pound slid to a new 28-month low. And Johnson faced a tough reception from farmers — a group central to the Welsh economy — who fear economic havoc if Britain leaves the European Union without a divorce deal. They say millions of sheep might have to be slaughtered if tariffs are slapped on lamb exports to the EU.

"The bottom line is we're exporting 40% of our sheep production, we are the second-largest producer of sheep meat in the world, so if we are priced ... we're tariffed out of the EU market, where does that 40% go?" said Minette Batters, president of the National Farmers Union.

The government argues that leaving the 28-nation bloc and its rules-bound Common Agricultural Policy will be "a historic opportunity to introduce new schemes to support farming" and will open up new markets for U.K. agricultural exports.

The government's Wales Secretary Alun Cairns said "90% of global growth will come from outside of the EU." However, trade with the EU accounts for almost half of all British exports, and any new trade deals are years away.

The trip follows a visit Monday to Scotland, where Johnson was booed by protesters and warned by First Minister Nicola Sturgeon that his vow to take Britain out of the EU on Oct. 31, with or without a deal, was "dangerous."

Britain's 2016 vote to leave the EU divided the country and also strained the bonds among the four nations that make up the U.K.: England, Scotland, Wales and Northern Ireland.

A majority of voters in England and Wales backed leaving in the referendum, while Scotland and Northern Ireland voted to remain. That has emboldened Scotland's nationalist government to demand a vote on independence, arguing that Scotland should not be forced out of the EU against its will.

In Parliament last week, Scottish National Party lawmaker Ian Blackford mockingly welcomed Johnson as "the last prime minister of the United Kingdom."

Johnson also plans a visit to Northern Ireland, the only part of the U.K. to share a land border with the EU. The status of that currently invisible frontier with the Republic of Ireland has become the main stumbling block to a Brexit deal.

The pound has fallen sharply in recent days as businesses warn that no amount of preparation can eliminate the economic damage if Britain crashes out of the 28-nation trading bloc without agreement on the terms. The currency fell early Tuesday to $1.2120, its lowest value since March 2017.

Fiona Cincotta, senior market analyst at City Index, said sterling had lost 4.3% of its value since the beginning of July.

"Investors' main concern remains a hard no-deal Brexit which has the potential to pull the economy into chaos," she said. "Boris Johnson's new cabinet did little to alleviate those fears, taking a hard-line with Europe on forthcoming negotiations."

Johnson became prime minister last week after winning a Conservative Party leadership contest by promising the strongly pro-Brexit party membership that the U.K. will leave the EU on the scheduled date of Oct. 31, with or without a divorce deal.

The EU struck a withdrawal agreement with Johnson's predecessor, Theresa May, but it was rejected three times by Britain's Parliament. Johnson is insisting the bloc make major changes to May's spurned deal, including scrapping an insurance policy for the Irish border that has been rejected by U.K. lawmakers.

The EU insists it won't reopen the 585-page withdrawal agreement it spent two years negotiating with May's government.

Johnson's government has been accused of sending mixed messages on Brexit that have unsettled markets.

Michael Gove, who heads a new Brexit delivery committee in Cabinet, has said the government is "operating on the assumption" that the U.K. will leave without a deal.

But Johnson — who just weeks ago put the odds of leaving without a divorce agreement at a million to one — said Monday he was "very confident" of getting a new deal.

There are currently no new negotiations planned between Britain and the bloc.

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