Banks and housebuilders fall sharply as Raab resigns over Brexit deal
The UK's major banks and housebuilders have suffered this morning in the wake of a number of resignations following Theresa May's draft Brexit deal.
Shares in Barratt Developments and Persimmon, both down more than seven per cent, were the biggest fallers on the FTSE 100 in the aftermath of the cabinet's approval of the draft agreement last night.
Shares in retail banks also dropped sharply as Lloyds fell 5.4 per cent, Barclays slumped 5.2 per cent and Royal Bank of Scotland slid six per cent.
The fall began when Brexit secretary Dominic Raab resigned earlier this morning, signalling a lack of confidence in the agreement.
Raab's resignation, which has since been followed by those of work and pensions minister Esther McVey and Department for Exiting the EU minister Suella Braverman, also sparked a sterling sell off as the pound dropped 1.3 per cent to $1.281.
“Raab's resignation has sent shockwaves through the market and will have come as a surprise to Theresa May,” Hamish Muress, analyst at OFX said.
“In reaction, the pound has crashed down from its giddy heights, and if a vote of no confidence is called then we can expect further losses.
“The pound is no longer trading on the basis of a soft Brexit vs hard Brexit, but rather on the incredibly high level of uncertainty,” he added.
As the Prime Minister defended her deal in parliament this morning, ERG chief and Brexiter Jacob Rees-Mogg asked May why he shouldn't write a letter of no confidence in her as Tory leader.
May reiterated that the UK will be leaving the EU at the end of March 2019 – despite the UK not being able to pull out unilaterally of the temporary customs union arrangement with the EU.
Nicky Morgan, Amber Rudd and Nicholas Soames have said they will vote for the deal.
May's deal has the backing of Nicholas Soames, Amber Rudd and Nicky Morgan.
Small bright spots in a chamber that seems almost entirely opposed to her plan, and may yet prove significant.
— Christian May (@ChristianJMay) November 15, 2018
May added that the UK will keep preparing for a no-deal Brexit.
“We have been preparing for no-deal and we continue to prepare for no-deal because I recognise that we have a further stage of negotiation with the European council and then that deal when finalised … has to come back to this House,” she said.
City leaders welcomed the agreement last night, which pledged to “preserve financial stability” and called for close co-operation between the UK and the EU when it came to financial services.
Catherine McGuiness, policy chairman at the City of London Corporation said: “The proposed framework for the future relationship provides welcome clarity and offers a foundation for financial services.
“In particular, the commitment to close regulatory and supervisory cooperation is a positive move that recognises the need for any deal to reflect the City’s unique role in providing services to households and businesses across Europe.”