The pound took a battering on foreign exchanges this morning at the start of what promises to be a tumultuous week for Britain’s Brexit debate.
By Friday, the Government may have fallen, a new Prime Minister may have been installed or a General Election may have been called. In addition, Britain’s age-old system of political parties could be in ruins.
Parliament is due to debate the issue of Brexit this week and a cross-party alliance of MPs is hoping to pass a law forbidding Prime Minister Boris Johnson from taking the UK out of the European Union without an agreement with Brussels.
Rebel meeting cancelled
The Government has warned that rebel Tory MPs voting with opposition members to support this move will be thrown out of the Conservative Party and be “de-selected” as candidates for the next election.
Sterling lost ground against the euro this morning, dropping 0.4% to €1.1021. It also dropped against the dollar, losing 0.55% to $1.2098. Against the yen it fell 0.52% to 128.595 yen. The blue-chip FTSE 100 Index rose 0.93% to 7,273.91 while the more domestically focused FTSE 250 was up 0.37% at 19,466.30.
Mr Johnson had been due to meet Tory rebels today, but press reports suggested he had pulled out of the event, feeling there was no point in further discussion with them. Instead, the Prime Minister reportedly decided yesterday, in talks with colleagues at his official country residence, Chequers, that anyone voting against the Government would be expelled from the party.
Britain is due to leave the EU on October 31 and Mr Johnson has vowed to meet this deadline, regardless of whether or not a deal governing Britain’s future relationship with the EU can be agreed. MPs opposed to leaving with no deal are planning to pass a law either ordering the Government to seek an extension or simply ruling out a no-deal Brexit.
“Rocky week ahead”
Key to the whole debate would be how the Government would choose to respond to such a vote in Parliament. If ordered to seek an extension, Mr Johnson could attach to such a request the sort of conditions that would ensure it would be refused.
There is also doubt as to whether the Government would feel obliged to fall into line with a law prohibiting a no-deal Brexit, depending on how such a piece of legislation would be worded.
A vote of no confidence may lead to attempts to construct an alternative Parliamentary majority behind a different Prime Minister, such as the Labour Party leader Jeremy Corbyn. Or it could lead to a General Election in which a number of new groupings would take to the field, including the Brexit Party, the pro-EU Change UK and expelled Tory rebels standing as Independent Conservatives.
This morning, the Financial Times, reporting on sterling’s decline, wrote of “expectations of a rocky week ahead for the currency.”