Businesses 'still in danger zone' over Brexit

March 14, 2019

Business groups have cautiously welcomed a Commons vote to delay Brexit but warned that the decision failed to lift the uncertainty facing British firms.

The British Chambers of Commerce (BCC) said businesses, jobs and investment were "still firmly in the danger zone".

Meanwhile, the pound was little changed - after a week which has seen it swing wildly on the latest developments from Westminster.

Adam Marshall, director general of the British Chambers of Commerce, said: "While most businesses will support an extension to Article 50 to avert the prospect of a messy and disorderly exit on 29 March, with just two weeks to go this vote leaves firms with no real clarity on the future.

"Once again, businesses are left waiting for parliament to reach a consensus on the way forward and are losing faith that they will achieve this.

"Businesses, jobs, investment and our communities are still firmly in the danger zone."

Edwin Morgan, interim director general of the Institute of Directors, said: "Few in business will be stepping forward to thank parliament for its efforts this week.

"We know a tiny, tiny amount more about the next steps than we did a couple of days ago, but the problem is that the clock is still ticking and no deal is still the default."

The pound has see-sawed over the course of the week on the latest developments, rising sharply on Monday as Theresa May secured what initially seemed to be a breakthrough in talks with the EU.

It fell again as it became clear that the concessions she secured were far from enough to win parliamentary backing for her deal.

But sterling surged on Wednesday night as MPs voted to reject a no-deal Brexit in any circumstance - climbing three cents against the dollar to a nine-month high just below $1.34 and reaching a new 22-month high versus the euro at €1.18.

By Thursday, however, traders' appetites for the pound had cooled again as uncertainty persisted, sending it about a cent lower against both currencies.

The Brexit delay vote itself had little impact, leaving sterling at just over $1.32 versus the dollar and around €1.17 against the euro.

Attention was increasingly focused on a further attempt by the prime minister to get her deal through the Commons.

Dean Turner, UK economist at UBS Wealth Management, said: "Much less drama has emerged from parliament tonight, and watchful eyes will now turn to the third meaningful vote, most likely to take place on Tuesday.

"The prime minister's odds of success are unquestionably creeping up, but it is still uncertain that she will be successful on this occasion."

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