The pound tumbled to a seven-year low and the UK was warned its credit rating was at risk on Monday as the effect of Boris Johnson’s backing for the Brexit campaign was felt in financial markets.
However, as traders and city economists wagered that the London mayor’s intervention had raised the probability of a leave vote in June’s EU referendum, high-profile business figures threw their support behind prime minister David Cameron’s push to stay in the EU.
The bosses of some of Britain’s top companies, including easyJet, the defence contractor BAE Systems and Shell, signed a letter backing a vote to stay in Europe. The letter was signed by the heads of about a third of the businesses on the FTSE 100 index of Britain’s largest stock-market-listed companies.
There were also some notable absentees from the list, including Tesco and Sainsbury’s. Rival supermarket chain Morrisons, which dropped out of the FTSE last year, also declined to sign the letter, which was compiled by City PR boss Roland Rudd. The supermarket groups, which did not back either side before the Scottish referendum, said the choice over whether to stay within the EU was one for the British people.
The letter reads: “The businesses we lead represent every sector and region of the United Kingdom. Together we employ more than one million people across the country.
“Following the Prime Minister’s renegotiation, we believe that Britain is better off staying in a reformed European Union. He has secured a commitment from the EU to reduce the burden of regulation, deepen the single market and to sign off crucial international trade deals.
“Business needs unrestricted access to the European market of 500 million people in order to continue to grow, invest and create jobs. We believe that leaving the EU would deter investment and threaten jobs. It would put the economy at risk.
“Britain will be stronger, safer and better off remaining a member of the European Union.”
On the markets, sterling dropped to a seven-year low against the dollar at $1.4057, and currency experts forecast more sharp falls in the run-up to the public vote. Market jitters have been made worse by widespread mistrust of opinion polls after they failed to predict last year’s clear electoral win for the Conservative party.
“The next four months will be racked with uncertainty. Recent referendum polls have been neck and neck. And, in any case, as illustrated by last year’s general election and the 2014 Scottish referendum, even if they do start to give a clearer picture of the likely outcome, the opinion polls cannot be trusted,” said analysts at Daiwa Capital Markets.
Investment banks renewed warnings of the economic risks from a Brexit, predicting exports and investment would be hit. Britain’s biggest bank, HSBC, used its annual results update to warn of a “heightened risk of uncertainty” from a vote to leave the EU. Those fears were reflected in currency markets where the pound suffered its biggest one-day drop of Cameron’s premiership.