Branson warns pound to plummet in no-deal Brexit
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A no-deal Brexit would cause the pound to plummet and be worth the same as the dollar, Virgin boss Sir Richard Branson has said.
This would be “devastating” for Virgin, and force the group to shift investment out of the UK, he said.
Sir Richard also criticised the rail franchising system, saying it stifled entrepreneurs.
The Department for Transport said rail firms “clearly see an ability to be entrepreneurial”.
Pound hit
Boris Johnson, the frontrunner in the Tory leadership race, has refused to rule out suspending parliament to force through a no-deal Brexit.
But Sir Richard told the BBC that the UK crashing out of the EU without a deal would cause the pound to slump.
“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 [one for one] with the dollar if there is a hard Brexit,” he said.
The businessman, whose portfolio includes airlines, financial services and media companies, expects big losses for all his UK interests, saying it would be “devastating for many Virgin companies”.
“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 added.
Sterling pressures
Sir Richard warned in December that the UK would be left “near bankrupt” if there was a hard Brexit.
He told the BBC at the time that he was “absolutely certain” that leaving the EU without a deal would lead to the closure of “quite a few British businesses”.
Virgin Atlantic, the group’s major airline, has, according to Sir Richard, already suffered substantial loses since the UK voted to leave the EU in 2016, due to the drop in the pound against the dollar.
“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 said.
A hard Brexit would mean airfreight from Europe to the US would just disappear, he says, “so that would be another £100m just down the drain”.
“And I can carry on. There’s an enormous list when you look at each Virgin company.”
Sterling has had a tough week, falling to its lowest point in two years.
It dropped below $1.25 after succumbing to political and economic pressures.
Rail dispute
Sir Richard also criticised the UK’s rail franchising system.
Virgin Trains, the franchise that has run on the West Coast Mainline for 22 years, will end in March next year.
After a dispute with the Department for Transport over who should bear pension risk, in April, Virgin and its operating partner Stagecoach were disqualified from rebidding to operate on the line.
Sir Richard said train companies should contribute to the pension deficit, but shouldn’t have an open-ended risk.
He added: “I’m very disappointed for everybody who works for Virgin Trains. They’ve done an extraordinary job over 22 years. Sad that a great company may be coming to an end.”
He said he was working on “open access” for Virgin Trains on the West Coast Mainline, which would let the firm operate a pared-down service.
Sir Richard also said the railway franchising system was “a real mess”, adding that it was too constrictive.
“The Department for Transport, in their wisdom, give you massive long lists of dos and don’ts, and it’s very difficult to be entrepreneurial, and that’s sad,” he said.
But an official from the Department for Transport said: “We are sorry to see Virgin leave the UK rail industry having failed to put forward a compliant bid.
“Other companies have done so and the remaining bidders in current competitions clearly see an ability to be entrepreneurial on the railways.
“The recent winning bid on the East Midlands franchise accepted the pensions terms and will deliver significant benefits for passengers, transforming their journeys.”
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