The British Pound has fallen on Tuesday to its lowest level against the U.S. dollar in 31 years on the fears that Brexit will affect the economy in a negative way.
The currency dropped to just over $1.27 in London to start the day, which is lower than immediately after the vote to leave the European Union back on June 23.
Brexit plans have been emerging over the past few days, with talks taking place with the EU in early 2017. The UK’s exit will follow in two years time and the UK will put a big priority on the controlling of its immigration.
Leaders in Europe made it clear to Britain that if it does not give free movement to citizens of the EU across all its borders, it would lose certain rights it has to access free trade.
Investors are therefore worrying about two different issues. First, British exporters could find it more difficult to compete within Europe. Secondly, the banks in the UK could lose the ability to carry out business freely throughout the 28-member region.
A large number of financial companies across the UK currently hold passports that give them the right to trade across Europe without opening subsidiaries in each individual country.
Those businesses are of great importance to Britain, as the financial sector and its related services accounts for over 12% of the country’s GDP.
It was reported by international news agencies on Tuesday that UK Prime Minister Theresa May is not willing to prioritize the nation’s financial services sector in the exit negotiations that will be held with the EU.
Anonymous sources were cited that said the sector holds much less sway with the current Prime Minister than it did were David Cameron her predecessor.
Instead, Prime Minister May appears now to be putting top priority to the borders of Britain first. Brexit campaigners promised to put new limits on how many citizens of the EU could enter the UK.
The leader of the Conservatives said that the country voted to exit the EU to be fully independent and sovereign which means we are not leaving the EU today and giving up control of out immigration all over again.
Some investors worry that May’s strategy of keeping a hard line on immigration would result in a difficult exit from the EU resulting in difficulty for years for Britain.
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