British pound plummets to new 31-year low

PanARMENIAN.Net - The British pound slumped to its lowest level in 31 years on Tuesday, October 4 on fears that the UK's divorce from the European Union will be bad for the economy, CNN Money reports.

The currency fell to just above $1.27 in early trading, lower even than in the immediate aftermath of the EU referendum on June 23, when Brits voted to take their country out of the 28-member group.

Brexit plans have begun to emerge in the last few days: talks with the EU will begin in early 2017, the exit will happen two years later, and the UK will place a high priority on controlling immigration.

European leaders have made clear that if Britain does not allow free movement of EU citizens across its borders, it will lose some of its rights to access the free trade area.

So investors are worrying again about two big issues: British exporters may find it harder to compete in Europe, and the country's banks could lose the ability to do business freely across the region.

Thousands of financial firms in the UK currently have "passports" that allow them to trade in Europe without establishing subsidiaries in each country. And those businesses are vital for Britain: the financial and related services sector accounts for 12% of GDP.

Bloomberg reported Tuesday that Prime Minister Theresa May would "refuse to prioritize" the financial services industry in exit negotiations with the EU. Citing three anonymous government sources, Bloomberg said the sector held far less sway with May than with her predecessor David Cameron.

Instead, May now appears to be putting control of Britain's borders first. Brexit campaigners had promised to impose new limits on the number of EU citizens entering the UK, CNN says.

"We voted to leave the European Union and become a fully independent, sovereign country," the Conservative leader told party members this weekend. "We are not leaving the European Union today to give up control of immigration again."