The deadline to extend the Brexit transition period is on June 30 and with that deadline approaching, experts have started to believe the UK could well through with its promise to walk away from negotiations. The pound was 0.7 percent down against the euro which stood at 89.96. Fears have risen on the continent that a deal will not be reached or that an extension will not be requested causing rapid selling of the pound.
Neil Jones, head of European hedge fund sales at Mizuho said: “My sense is that the market is selling sterling again and this will continue this month on fear that we might not get a deal or an extension, so there are some preparations for a worst-case scenario — Brexit without a deal, which is a possibility.”
This comes as Leader of the House of Commons, Jacob Rees-Mogg declared an extension to the transition period would not be in the interest of the UK or EU.
He said: “Ensuring we leave the transition period successfully in full by the end of this year is one of the Government’s and, even more importantly, the British people’s highest priorities.
“An extension to the transition period would be neither in the UK’s nor the European Union’s interests.
Brexit news: Sterlign drops on the euro
Brexit news: The sterling fell in trading
“Both parties want and need to conclude a deal this year to complete the transition period.
“An extension to the transition period will bind us into future EU legislation without us having any say in designing it, but still having to foot the bill to payments to the EU budget.”
Cabinet Office Minister, Michael Gove also stated there still was ample time to conclude a deal before the transition period ends on December 31.
Mr Gove told MPs: “The detailed work that has been undertaken by both sides should not be set aside or diminished.
JUST IN: Brexit backlash: Guy Verhofstadt savaged after yet another attack
Brexit news: The round of talks concludes on Friday
“All that is required is political will, imagination and flexibility.
“I believe certainly with the advent of the German presidency of the European Union on July 1 that we will see the leadership required in order to guarantee that we secure the agreement we need.”
The Bank of England has also instructed banks to bolster preparations for a no deal Brexit.
Governor, Andrew Bailey held a conference on Tuesday where he stated banks need to step up plans for the scenario ahead of the end of 2020.
Brussels on alert as Rees-Mogg quotes Thatcher in Brexit speech [Latest]
Brexit news: Germany panics over deal – ‘This is must-do’ [Update]
EU plea: Bloc urged to resolve horror housing row in Greece crisis [Latest]
Brexit news: The final round of Brexit talks took place this week
Brexit news: The EU announced a bumper new package
The central bank said on Wednesday: “It is fundamental to the Bank of England’s remit that it prepares the UK financial system for all risks that it might face.
“In performing that role, the governor meets the leadership of UK banks on a very regular basis.
“As we have said previously, the possibility that negotiations between the UK and EU over a future trading relationship might not conclude in a deal is one of a number of outcomes that UK banks need to prepare for over the coming months.”
The comments from UK officials comes as the European Central Bank (ECB) announced it would buy an extra €600billion (£539billion) bonds in a bid to encourage a revival of the eurozone economies.
The ECB has also predicted the continent’s economy will contract by 8.7 percent, a record in the post-war years.
Commission President, Ursula von der Leyen also announced a huge recovery fund of £670billion to combat the crisis.
Brexit news: The ECB also annoucned a new grant
The package will be made up of a mixture of grants and loans for every EU member state.
This comes on top of a €1.1trillion (£989billion) budget between 2021-27.