Richard Branson is concerned a no-deal Brexit could hurt the value of the British pound and drop it to the same value as the dollar.
The billionaire Virgin Group founder told the BBC this week that a plummet in the currency’s value would be “devastating” to the company and that Virgin would have to shift investment out of the U.K. in the event of a so-called “hard Brexit.”
“It obviously is going to result in us spending a lot less money in Britain, and just putting all our energies into other countries,” he said.
Britain narrowly voted to leave the European Union in June 2016. The value of the pound has slumped from about $1.50 at the start of 2016 to less than $1.25 recently. Branson told the BBC he expected a hard Brexit would drop the pound’s value to parity with the dollar.
Branson’s comments to the BBC came as Britain’s Conservative Party is in the midst of picking the country’s next prime minister. Boris Johnson, who has been widely reported as the frontrunner, has said he would take the U.K. out of the European Union (EU) even it if means going through a hard Brexit without an agreement on how to depart.
The deadline for the U.K. to leave the EU is Oct. 31. It’s already been extended twice.
Branson told the BBC Virgin Atlantic, his company’s airline, has already suffered financially since the U.K. voted to leave the EU in 2016 because the pound’s value has dropped.
“All our costs are in dollars,” he said. “Maintenance, plane costs, pretty well every cost is in dollars. And therefore, the bottom line hit of that was 100 million pounds a year, say.”
A hard Brexit would cost the airline another 100 million pounds due to a dramatic drop in airfreight between Europe and the U.S., according to the report.
“And I can carry on,” Branson said. “There’s an enormous list when you look at each Virgin company.”
The uncertainty has already slowed the British economy. The Bank of England warned last year that leaving the EU without a deal could cause the U.K.’s worst recession in nearly a century.
Most economists think it would hit a deep recession due to new tariffs and other issues.
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Michael Kitson, an economist at the Cambridge Judge Business School, told The Associated Press the pound’s value won’t appreciate until the Brexit uncertainty is resolved.
“First, the markets are wary about the prospects of a no-deal Brexit; second, there are concerns about Boris Johnson’s incoherent ramblings on economic policy,” he said. “Third, there will be scrutiny on the first Johnson cabinet (and especially who he appoints as chancellor) to see if there is some trace of economic competence amongst the zealous Brexiteers who are likely to get the top jobs.”
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