A no-deal Brexit could cause sterling to crash until it hits parity with the dollar, according to Virgin entrepreneur Sir Richard Branson.
Branson warned this would be “devastating” for Virgin brands, which cover rail, air travel, financial services and media, and could lead the company to pull investment out of the UK.
“The pound was at $1.53 when the referendum took place. The pound today it is at $1.22, $1.23, and the pound will collapse to parity with the dollar if there is a hard Brexit,” Branson told the BBC today.
“It obviously is going to result in us spending a lot less money in Britain, and just putting all our energies into other countries.”
Virgin Atlantic, which recently led a purchase of struggling airline Flybe, has already counted serious losses since the Brexit vote, according to Branson, due to the pound’s drop in value.
“All our costs are in dollars. Maintenance, plane costs, pretty well every cost is in dollars. And therefore, the bottom line hit of that was £100m a year, say,” he told the BBC.
His warning comes after sterling hit a two-year low this week, declining below $1.25 yesterday amid poor economic data and political uncertainty.
British GDP grew 0.3 per cent in the three months to the end of May to surpass expectations of just 0.1 per cent growth, data showed yesterday.
But economists warned of a “deteriorating picture” across UK services as the sector, which comprises 70 per cent of the economy, stagnated.
Meanwhile Tory leadership frontrunner Boris Johnson has committed to leaving the EU without a deal on 31 October if he fails to secure a withdrawal agreement as the next Prime Minister.
Branson’s claims follow the UK’s former Brussels ambassador warning that markets have underpriced the UK’s exit from the EU without an agreement.
Sir Ivan Rogers said last month that investors and voters have “underappreciated” such risks, in comments to the Times.
However, Arbuthnot Banking Group’s economic adviser and Brexiter, Ruth Lea, dismissed Branson’s predictions.
“Richard Branson doesn’t give up,” she told City A.M. “Ahead of the 2016 referendum he was preaching of the economic dangers, if not disaster, if the British people had the temerity to ignore his sage advice and vote for Brexit.
“He was wrong about that. Credibility shattered but undaunted, he’s back on Project Fear mark 2, warning of the perils of a no-deal Brexit. But I doubt if anyone is really listening – except the BBC. Life is moving on.”
Main picture credit: Getty