Sterling plummets as UK attorney general admits legal risk remains under new deal

Pedro Gonçalves
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Sterling plummets as UK attorney general admits legal risk remains under new deal

Sterling has fallen sharply after the UK's Atorney General Geofrey Cox said that the "legal risk remains unchanged" with regards to the country being "stuck" in the Irish backstop arrangement under Theresa May's revised Brexit deal.

The pound has fallen by 1.1% against the euro, 1% against the Japanese yen and 1.2% against the dollar, after the blow to Number 10 ahead of a vote on the matter.

"The legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have ... no internationally lawful means of exiting the Protocol's arrangements, save by agreement," Cox said in the statement.

The legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have ... no internationally lawful means of exiting the Protocol’s arrangements, save by agreement"

Without  Cox's support, it appears unlikely that Brexiter MPs and Northern Ireland's Democratic Unionist party will back the deal, complicating the path to agreeing a way forward with Brussels before the March 29 Brexit deadline.

Markets expected him to revise his view of the deal and help win over eurosceptic lawmakers in May's Conservative Party before today's parliamentary vote on the withdrawal agreement.

The backstop is a mechanism to avoid restoration of the "hard" border between the Republic of Ireland and Northern Ireland that was erased with the 1998 Good Friday peace agreement between London and Dublin. Some UK politicians view  the backstop as a mechanism that force the UK to remain within a EU customs union for an indefinite amount of time and unable to leave unilaterally, even as the backstop is intended onnly as a last-resort.

Investors are braced for a vote at 1900 GMT that could decide how, and if, Britain leaves the EU in less than three weeks.

If the bill fails to pass today, the Commons will hold another vote on Wednesday at the same time on whether to exit with no deal — which it will probably vote against — then another on Thursday on whether to request a delay to Brexit.

"Dear British MPs, please be sensible and accept the deal today," said Antje Praefcke, a currencies analyst at Commerzbank in Frankfurt. "No doubt it would be the best outcome for all parties involved. And sterling would be able to breathe a sigh of relief."

For Nigel Green, founder and CEO of deVere Group, the most credible way to end Brexit gridlock and give UK and global business much-needed certainty is with a second referendum.

Green said: "Most legal experts agree that the much-hyped revised agreement does not, in reality, significantly change anything regarding the Irish backstop. 

"In all probability, it will, therefore, be rejected once again in the House of Commons by MPs who handed Theresa May the biggest parliamentary defeat in history on this very issue in January." 

He continues: "As such, the decision remains a political one - and therein lies the main problem.  There is no majority in parliament for any one way forward.   

"What most people across the UK, as well as British and global business, do want though is an end to the paralysing gridlock and uncertainty. 

"Politicians have proven themselves to be incapable of resolving this impasse in parliament.   

"Therefore, the sensible - probably the only - way through is to give it back to the people, giving them accurate, unambiguous information in order to allow them to make an informed choice on the final deal." 

The deVere CEO concludes: "There is no parliamentary majority for any Brexit option.  Allowing the public to vote and giving them a final say is quite simply the only credible solution we now have available."