The British pound dropped sharply on Monday after Theresa May called off the crucial Brexit deal vote, which was scheduled for Tuesday. The Prime Minister made the announcement saying the deal “would be rejected by a significant margin.”
She said members of parliament backed much of the deal she struck with the European Union last month, but concerns over the Northern Irish backstop have been raised by some members.
In an address to the House of Commons, May said, “I’ve listened very carefully to what has been said in this chamber and out of it from members of all sides. From listening to those views, it is clear that while there is broad support for many of the key aspects of the view, on one issue, the Northern Ireland backstop, there remain widespread and deep concern.”
She continued, “As a result if we went ahead and held the vote tomorrow the deal would be rejected by a significant margin. We will, therefore, defer the vote scheduled for tomorrow and not proceed to divide the House at this time.”
The pound sank below $1.26, its lowest level for almost two years, as investors were left in the dark about what happens next. It also shed more than 1.1% against the euro amid the increasing risks to the UK economy if no deal is agreed upon. The last time the pound experienced one of its worst days was on June 23, 2016 when the country voted to withdraw from the EU.
The EU through Council President Donald Tusk has since ruled out renegotiating May’s agreement, saying that time is running out. However, Tusk said leaders from both sides will meet to discuss the deal in order to facilitate UK ratification. May believes it can still go through if the concerns of the MPs are addressed, saying that is what she plans to do in the next few days.
“I have decided to call #EUCO on #Brexit (art. 50) on Thursday. We will not renegotiate the deal, including the backstop, but we are ready to discuss how to facilitate UK ratification. As time is running out, we want to discuss our preparedness for a no-deal scenario,” Tusk twitted.
Speaking to reports in Brussels, a spokesman of the European Commission also added, “We have an agreement on the table that was endorsed by the European Commission in its Article format on the 25 November. As President Junker said, this deal is the best and only deal.”