THE British pound will plummet against the euro if Boris Johnson is elected as the UK’s next prime minister, a leading financial group has claimed.
In bad news for British retirees abroad, the deVere Group has estimated that Johnson’s openness to a no-deal Brexit will have a negative impact on British sterling.
It means Brits in Spain who rely on their UK pensions will see their monies go less further, increasing their costs of living.
Nigel Green, CEO of deVere Group said: “The pound will be delivered another bloody nose should Boris Johnson, the current frontrunner, win the race to be Tory leader and UK Prime Minister.
“Further downward pressure will hit sterling in this scenario due to the increased likelihood that the UK would be taken into a no-deal Brexit by Mr Johnson.
“Frontrunner Boris will be further emboldened in his no-deal Brexit approach should Nigel Farage’s Brexit party win its first parliamentary seat in the Peterborough by-election on Thursday evening.”
The former London mayor is the odds-on favourite to win the Conservative party leadership contest, securing the support of more than 40 Conservative MPs, putting him far ahead of his rivals.
It comes after Johnson told a conference in Interlaken, Switzerland: “We will leave the EU on 31 October, deal or no deal.”
He added that he could try to renegotiate a better deal with the EU before pushing ahead with a no-deal Brexit if necessary.
Green added: “Brexit aside, a Johnson victory would almost certainly increase sterling volatility.
“He is known for his erratic style and has a long history of gaffes and controversies – including his infamous ‘f**k business’ comment.
“If he takes the UK’s top job, his unscripted comments may result in sharp moves in the pound.”
He continued: “During the past two years, the pound has been battered when it comes to its price against other currencies.
“The significant drop in the value of the pound has contributed to reducing people’s purchasing power and a drop in UK living standards. Weaker sterling means imports are more expensive, with rising prices being passed on to consumers.
“The fall in the pound is good for exports some claim, but it must be remembered that around 50% of UK exports rely on imported components. These will become more expensive as the pound falls in value.
“A low pound is, of course, bad news for British holidaymakers and travellers abroad – with trips to Europe and the U.S. increasingly expensive. Even destinations such as Dubai and China are more expensive as their currencies are pegged to the U.S. dollar.
“Arguably, the key issue for the UK, however, is that one of its biggest and most important sectors, financial services, will suffer from another knock to the pound. It will be hit because it is built on foreign investment that puts its faith in a strong pound.”
The deVere CEO concluded: “A weak pound has become the ‘new normal’ over the last three years since the referendum. But should Boris Johnson walk through that famous black door at Downing Street as PM, the pound can be expected to fall further still.”