Mercurial Branson Warns Of Sterling’s Collapse
Sir Richard Branson is a British entrepreneur who made his fortune originally in the music business and with a chain of record shops, the foundation of his Virgin Group which, today, has interests stemming from the airline industry, to trains, financial services and even health care. He is one of the richest and most successful British businessmen and is regarded with considerable affection by the public.
The astounding thing about Brexit is that politicians who support in and those in government seem to be deaf to the concerns of business and economic experts about the negative impact that it will have on the economy, jobs and purchasing power (to say the least). These concerns are greatly amplified in the event of a “no deal” Brexit which would dump the UK out of the EU on (potentially) the first of November without any transitional period to a reliance o WTO rules and the re-imposition of physical borders for (at least some) goods (such as livestock, meat products and other items subject to phytosanitary controls) as a consequence. The two contenders for leader of the Conservative party and hence PM are actively suggesting that such a “no deal” exit is an acceptable Brexit outcome – although the sincerity with which they hold this view must be open to question.
Branson is the latest person to warn of the risks of a “no deal” Brexit and has suggested that it will cause a “collapse” in Sterling to parity with the US Dollar. He has spelled out what this would mean for his business group, warning that it would be “devastating” and would cause the group to move investment out of the UK.
"The pound was at $1.53 when the referendum took place. The pound today it is at $1.22, $1.23, and the pound will collapse to parity [one for one] with the dollar if there is a hard Brexit. It obviously is going to result in us spending a lot less money in Britain, and just putting all our energies into other countries", Sir Richard said.
He said that a “no deal” exit would leave the UK “near bankrupt” and that it would lead to the closure of “quite a few British businesses”. He pointed out the consequences for many firms of a weaker Pound:
"All our costs are in dollars. Maintenance, plane costs, pretty well every cost is in dollars. And therefore, the bottom line hit of that was £100m a year, say". He claimed that a chaotic Brexit would make airfreight to the US untenable for UK firms; "so that would be another £100m just down the drain. And I can carry on. There's an enormous list when you look at each Virgin company."
It is unlikely that economic reality will interfere with the selection of the next Tory leader, with Boris Johnson looking likely to emerge victorious and promising a “do or die” exit from the EU by 31st October 2019.