Thursday 17 October 2019 8:10 am

Pound sinks as DUP says it 'cannot support' Boris Johnson's Brexit deal

The DUP said today that “as things stand” it cannot support Boris Johnson’s proposed Brexit deal, sending the pound tumbling against the dollar.

The Northern Irish party said: “We will continue to work with the government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional intergrity of the UK”.

Read more: Boris Johnson inches closer to new Brexit deal

But Arlene Foster and Nigel Dodds warned they will not offer their backing to “what is being suggested on customs and consent issues”.

The DUP leaders added that “there is a lack of clarity on VAT”.

Prime Minister Johnson appeared to edge closer to a withdrawal agreement with EU leaders yesterday but had not yet won round Foster and her fellow DUP party members.

Downing Street conceded that it would not strike a Brexit deal with the EU before midnight yesterday but said the “mood music is encouraging”.

However, the DUP has poured cold water on Johnson’s latest proposals as talks go down to the wire.

The pound sank against the dollar in response, falling 0.452 per cent shortly after the DUP’s statement.

GBP stood at 1.2778, down 0.29 per cent, by 8.10am.

Sterling fell sharply as the DUP voiced their dissatisfaction with Boris Johnson's Brexit deal (credit: Yahoo Finance)
Sterling fell sharply as the DUP voiced their dissatisfaction with Boris Johnson’s Brexit deal (credit: Yahoo Finance)

The failure to win over the DUP could mean the deal faces defeat in parliament even if EU leaders give it their backing at today and tomorrow’s EU summit.

Details of issues relating to how the VAT regime will work were regarded as the final stumbling block last night until the DUP’s statement today.

The party has raised concerns over the Northern Ireland assembly’s oversight of future customs arrangements, known as consent.

If Johnson does manage to salvage a deal, MPs will get a chance to vote on it in a special sitting this Saturday.

But Johnson must secure an agreement with the EU by Saturday to avoid parliament’s Benn Act kicking in.

The Benn Act, which parliament passed to avoid a no-deal Brexit, seeks to force Johnson to request a Brexit delay until 31 January if he has failed to secure an agreement.

The PM has insisted the UK will leave the EU on 31 October. City A.M. has previously revealed the government may rely on the supremacy of EU law to bypass the Benn Act.

Read more: Most Brits want to honour Brexit referendum result, poll finds

If Johnson does secure a deal, this EU summit could be the UK’s last.

European Council President Donald Tusk said yesterday: “The basic foundations of this agreement are ready and theoretically we could accept a deal.

Deutsche Bank analyst Jim reid said a failure to secure a deal before Saturday will raise the possibility of a no-deal Brexit.

“If Johnson doesn’t reach a deal, and reverts to a no-deal stance, whether due to pressure from his Brexiteer flank or otherwise, then Brexit tail risks are reintroduced,” Reid said.

“This is because the UK government’s political incentives will likely shift back towards a no deal Brexit.”

If Johnson fails to convince the DUP of the merits of his deal, a delay would make the PM look weaker than embracing a no-deal departure, Reid said.

“Pressing ahead with negotiations next week after having been forced to extend Article 50 by the Benn legislation will make the government look weak, particularly if Johnson’s deal is characterised politically as a ‘sell out’,” he said.

The government had appeared to be set to win the support of Tory Eurosceptics collective the European Research Group.

Read more: Is a Brexit deal finally within Boris’ reach?

Earlier this week ERG chairman Steve Baker said he was “optimistic” of the deal, saying he would back a “tolerable” withdrawal agreement.

“We know there will be compromises, but we will be looking at this deal in minute detail with a view to supporting it, but until we see that text, we can’t say,” he told reporters.

This is a breaking news story. More to follow.