POLITICS

Theresa May Denies She's Backing 'Hard Brexit' - And Blames Media For Fall In The Pound

As sterling falls to two-month low against the dollar

09/01/2017 14:43 GMT | Updated 09/01/2017 15:13 GMT

Theresa May has denied she’s backing a ‘Hard Brexit’ - and suggested the media is to blame for another sharp drop in the value of the pound.

The Prime Minister hit back after currency markets took fright at her renewed suggestion that she will put immigration curbs ahead of trade with the European Union.

The pound-to-euro exchange rate plunged to a two-month low on Monday as traders reacted to her remarks on Sky News that she does not want to “keep bits of membership” of the EU, seen as a hint that she would quit the EU single market.

The pound fell to its lowest level against the dollar for two months on Monday, down by one cent at $1.22 in overnight trading. It was also down by one cent against the Euro at €1.16.

John Stillwell/PA Wire
Theresa May on Sky News on Sunday

Speaking in central London, May was asked whether the markets were getting their interpretation of her Brexit stance wrong - or if she was getting Brexit wrong.

She replied: “Well, I’m tempted to say the people who are getting it wrong are those who print things saying I’m talking about a hard Brexit, ‘it’s absolutely inevitable it’s a hard Brexit’.

“I don’t accept the terms hard or soft Brexit. What we are doing is going to get an ambitious, good, the best possible deal for the United Kingdom in terms of trading with, and operating within, the single European market.

“But it will be a new relationship because we won’t be members of the EU any longer. We will be outside the European Union, and therefore we will be negotiating a new relationship across not just trading but other areas with the European Union.”

May insisted that she could get a bespoke Brexit deal for the EU which maintained access to European trade while restoring controls over immigration to London.

However, academics and commentators, as well as Tory MPs, are increasingly convinced that a ‘clean Brexit’ is the most likely outcome and that the PM wants a transitional deal with Brussels to avoid a ‘cliff-edge’ effect.

A report by independent think tank UK in a Changing EU found last month that a ‘hard Brexit’ was on the cards.

Angela Merkel and EU leaders such as Donald Tusk have also warned that Britain cannot ‘have its cake and eat it’ - a reference to Boris Johnson’s infamous soundbite about life outside the 27-nation bloc - and insisted freedom of movement of EU citizens cannot be divorced from single market membership.

Overall, sterling is down against the dollar by about 19% since the Brexit vote.

City
The plunging pound

Liberal Democrat leader Tim Farron said: “Every time Theresa May opens her mouth on Brexit the pound falls further.

“It’s clear this Government is taking us towards a destructive hard Brexit that would hurt jobs, increase prices and blow a hole in the budget.”

Anna Soubry MP, leading supporter of Open Britain, said: “It’s encouraging to see Theresa May reject the idea of a hard, destructive Brexit and say that she will aim for a new deal with the European Union that puts the economy at its heart.

“She has surely noticed the dreadful reaction from the markets each time the Government hints that it will aim to leave the Single Market. Business knows that continued full participation in the Single Market is best for British jobs, growth and prosperity.

“When the Prime Minister further outlines the Government’s negotiating aims, she should commit to keeping Britain in the Single Market and ensure that reforming immigration and protecting our economy are not mutually exclusive.”

But pro-Brexit campaigners pointed to the fact that the London stock market was actually booming and that the UK consumer spending, employment and other indicators have remained strong since the EU referendum vote last June.