United Kingdom exchange-traded funds (ETFs) retreated on Monday as British Prime Minister Theresa May announced that the parliamentary vote to decide Britain’s Brexit decision to leave the European Union will be delayed.
As such, UK-focused ETFs were stung as the news caused the sterling to fall over 1 percent. The iShares MSCI United Kingdom ETF (NYSEArca: EWU) fell just under 2 percent, while the currency-focused Invesco Currency Shares British Pound Sterling (NYSEArca: FXB) lost 1.39 percent and the iShares MSCI United Kingdom Small-Cap ETF (BATS: EWUS) declined 2.45 percent.
May cited a bevy of gloomy forecasts for the decision to delay the vote, saying that she listened “very carefully to what has been said in this chamber and out of it.” With her premiership on the line as well as the stability of the government, May opted to “defer the vote scheduled for tomorrow and not proceed to divide the house at this time.”
Opposition to a Brexit deal point to trade difficulties, problems in attracting global talent and an increased cost of living as reasons to not back the proposition of Britain divorcing itself from the EU. A continuous point of contention in getting a Brexit deal done is the Irish backstop–an arrangement to ensure that Brexit, whether a deal is struck or otherwise, would not result in a hard border between Northern Ireland and the Republic of Ireland.
“It is clear that while there is broad support for many of the key aspects of the deal, on one issue — the Northern Ireland backstop — there remains widespread and deep concern,” May told the Parliament.
The news of the resignations came as May announced earlier this year that she garnered enough Cabinet support to move forward with a Brexit deal, effectively keeping the United Kingdom within the customs union of the European Union (EU) for an indefinite amount of time. Per a CNBC report, the proposed 500-page deal included commitments regarding UK citizens’ rights after Brexit takes place and a proposed 21-month transition period after Britain exits the EU on March 2019.
With May’s purported approval from the Cabinet earlier this year, the EU Commission was expected to make the draft publicly available and for the sake of brevity, a much shorter declaration would outline future security and economic Britain relations with the EU. In addition, the remaining member states in the EU would discuss the possibility of planning an emergency summit to sign off on the deal.
Ultimately, it will still come down to the backing by the Parliament and the latest delay simply adds another twist to the ongoing Brexit saga.
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