Pound slumps to two-year low as Brexit ‘war cabinet’ meets

The pound has slumped to a two-year low as the government doubled down on insisting the UK was prepared to leave the EU without a deal.

The hard line taken by the government – which saw a “war cabinet” of senior ministers meet for the first time today to ramp up preparations for a no-deal exit – was credited by traders for the pound falling to a fresh two-year low against both the dollar and euro.

In Scotland, which voted in 2016 to remain in the EU, members of the public booed Mr Johnson as he visited First Minister Nicola Sturgeon in Edinburgh on Monday afternoon.

Ms Sturgeon has said that Mr Johnson’s Brexit plans will hurt the economy of Scotland.

Speaking during a visit to the Faslane naval base on the Clyde earlier in the day, Boris Johnson said there was “every chance” Britain could get a new agreement with Brussels provided there was “goodwill” and “common sense” on both sides.

But the prime minister made clear that the current deal on the table was “dead” and that it has “got to go”.

“My approach is to be very outward going, I don’t want the UK to be aloof or hanging back,” Mr Johnson said.

“I want us to engage, to hold out the hand, to go the extra mile, extra thousand miles and what we want to do is make it absolutely clear that the backstop is no good. It’s dead, it’s got to go. The withdrawal agreement is dead, it’s got to go.”

The backstop is an element of Theresa May’s withdrawal agreement that is essentially an insurance policy to avoid the return of a hard border on the island of Ireland. But opponents object to it because it would mean Northern Ireland continuing to follow some EU rules and regulations.

The EU has repeatedly stated that it will not change Mrs May’s deal.

Speaking to Sky’s All Out Politics, Foreign Secretary Dominic Raab said the UK would leave the European Union without a deal unless the EU changed its position.

Mr Raab maintained the new government’s tough opening negotiating gambit, telling Sky News: “The EU’s response so far… it’s early days and you would expect the initial position to be robust and intransigent.

“But if their position is that there can’t be any change to a deal that failed three times, one the biggest defeat in parliamentary history in the House of Commons, then we would leave on WTO terms.

“It’s not just about the UK’s position, it’s about what the EU decides.”

When it was put to him that the EU was unlikely to reverse its longstanding refusal to consider scrapping the backstop, Mr Raab replied: “That’s for them to decide. They’ve been pretty stubborn throughout.

“Brexit is a decision taken by the UK people as one in a referendum and the response to Brexit by the EU will be something that they’ll need to take responsibility for.”

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The foreign secretary said the government was “making progress” towards getting Britain ready for no-deal, adding: “We’ve got period between now and October to really make sure we’re ready to manage the risks.

“But also then to be able to take the opportunities of Brexit.”

Mr Johnson has promised Britain will leave the EU on 31 October, with or without a deal.

In response to the stance being taken by the new government, sterling was trading below $1.23 on Monday afternoon as hedge funds reportedly increased their short positions to their highest level in almost a year.

The weaker pound has come at a bad time for holidaymakers heading abroad but it has helped the FTSE 100 hit its highest level this year.

The PM will miss the first meeting of the so-called Brexit “war cabinet”, otherwise known as the exit strategy committee, as he is making his first visit to Scotland since entering Downing Street.

Michael Gove, who is in charge of no-deal planning, will chair the meeting in the PM’s absence.

He will also lead meetings of the daily operations committee, covering all aspects of preparations for leaving the EU.

The new committees have been set up to ensure Brexit is delivered by 31 October.

The daily operations committee will gather every weekday in the Cabinet Office Briefing Rooms, with the first meeting on Tuesday.

A Downing Street source said it was being structured so that the Treasury would be “a motor for delivering Brexit, not the anchor”.

The exit strategy committee will meet twice a week – and its next meeting on Thursday will be chaired by the PM.

A third committee has also been established – the exit, economy and trade committee.

It will also be chaired by the PM and will “have a broad remit and will handle write rounds [internal memos and communications on Brexit circulated around government]”, with a particular focus on future relationships around the world.

(c) Sky News 2019: Pound slumps to two-year low as Brexit ‘war cabinet’ meets