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Theresa May plays down sterling volatility as pound plunges against the dollar

Published 04/10/2016

Prime Minister Theresa May said Brexit would see controls on the movement of EU workers to the UK
Prime Minister Theresa May said Brexit would see controls on the movement of EU workers to the UK

Prime Minister Theresa May has played down the significance of volatility in sterling, which saw the value of the pound plunge to a 31-year low against the US dollar.

The 0.5% fall to 1.277 dollars reflected concern in the markets over Mrs May's insistence she will assert control over immigration after Britain leaves the EU, raising expectations that the UK is set for a "hard Brexit" in which it will lose full access to the single market.

And further signs of anxiety about the prospects for the UK economy came as the International Monetary Fund downgraded its forecast for Britain's GDP in 2017 by 0.2% to 1.1% while raising its outlook for this year by 0.1% to 1.8%.

Asked how worried voters should be about the fall in the pound, Mrs May told the BBC: "Currencies of course go up and down. If you stand back and look at the fundamentals of our economy, which are strong, if you look at the other economic data that has been around in recent weeks, if you look indeed at the most recent forecasts now coming out for growth in our economy this year, all of that is more positive than people had expected it to be and predicted it to be."

She added: "The IMF themselves have upgraded their forecast for growth in the UK economy for this year. They've said that the response to the Brexit vote was more orderly than people had expected it to be.

"Yes, the IMF and others have said that they are forecasting a slowdown in the economy next year. What the Government needs to do is to ensure that we are taking the right approach and that in terms of the process of Brexit, we are making that as smooth as possible."

Mrs May was speaking at the Conservative conference in Birmingham, where Chancellor Philip Hammond on Monday warned of a "roller coaster" of economic turbulence over the two-year process of negotiating Britain's withdrawal from the EU.

She said that Mr Hammond would have an opportunity in his Autumn Statement on November 23 to "set out a trajectory for the Government's response over the next year".

Mrs May said she had tried to provide markets, businesses and voters with "certainty" by setting out on Sunday her plan to kick off the two-year Brexit negotiations under Article 50 of the EU treaties. But she insisted she would not provide a "running commentary" on the details of her negotiating stance.

She again dismissed the idea that regaining control over immigration would automatically mean the UK being excluded from full access to the single market, insisting that there was a "reciprocity" of interest for both the EU and Britain in maintaining free trade.

Britain would not be approaching Brussels as a "supplicant" but as an "independent, sovereign country" seeking an advantageous deal, she said.

The PM told Sky News: "We want to get the right deal for the UK. I think it's important that we look at this not in the sense that we are trying to see which bits of membership we can keep. We are going to be an independent sovereign country outside of the European Union and the question is what is the right relationship for us to have with the EU.

"I'm very clear about that. I want the relationship that gives the best possible opportunity for our businesses to trade with and operate in the EU and for European businesses to trade with us and operate within the UK."

She acknowledged: "It's not all going to be plain sailing. There will be some bumps in the road, but what I want to ensure is we get the right deal for the UK."

Opposition parties said Mrs May's warning meant jobs were at risk.

Shadow minister without portfolio Jon Ashworth said: "It's increasingly clear that Theresa May is steering us down the road of hard Brexit despite having no idea where it leads. The 'bumps in the road' she talks about are real threats to our economy, yet she's recklessly ploughing on, putting jobs and prosperity at risk.

"We desperately need a plan which delivers for working people, but the Tories have no answer to the challenges facing us. With Theresa May at the wheel, the Tories are driving us into trouble."

Liberal Democrat leader Tim Farron said: "These 'bumps', as she blithely calls them, are people's jobs and livelihoods. She seems as out of touch as her ministers.

"Her senior ministers seem to be unfazed when business leaders warn them, to their face, that 75,000 jobs in the City alone could be lost due to a hard Brexit.

"The Conservative Party are showing their true colours: reckless, divisive and uncaring. They are prepared to risk our future prosperity for their own short-term gain."

Mrs May again insisted that she would not accept an "off-the-shelf" deal based on those struck by other non-EU countries such as Norway or Switzerland.

"We need to approach this to make sure we get the right deal for the UK, not looking at models that already exist but saying what is going to work for us?" she said.

"This is about a partnership, a relationship with the EU which is going to be in the best interests of the UK."

And she told Five News: "I'm ambitious for the sort of deal that we are going to get from the EU. This is not about the UK as a supplicant to the EU. Actually there is a reciprocity here which is about the benefits of trade between both EU member states and the UK and the UK into the EU."

Mrs May earlier told BBC Radio 4's Today programme that Brexit would see controls on the movement of EU workers to the UK.

"Once we leave the EU there will be the opportunity to control movements coming from the European Union," she said. "I think, crucially, what people voted for on 23 June was for their Government to be able to be able to make those decisions, and it's their Government that will decide.

"Life's going to be different in the future, but I want to ensure it's a success."

Mrs May declined to say when she might achieve the goal of getting migration down to the "tens of thousands" target which she failed to hit during her six years as home secretary.

She told BBC Radio 5 Live: "The policy has not been watered down. We still believe that we should bring net migration down to sustainable levels; we think that means in the tens of thousands, so the policy has not changed in that sense."

Asked when that target would be met, she said: "I have always made the point that in immigration you have to be constantly looking at the issue, you have to be constantly working to make sure that you are closing any loopholes that people might try to find in the system."

Labour MP Pat McFadden, a supporter of the Open Britain campaign, said: "Brexit hasn't happened yet, so no-one should read too much into any single set of figures.

"However, a plummeting pound; slower growth warnings; and the potential loss of billions in tax revenue underline the real danger of sleepwalking towards a hard Brexit."

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