British stocks drop as prospect of no-deal Brexit grows
London-listed shares ended lower on Friday as investors prepared for Britain to leave the European Union in three weeks without a trade deal, while Rolls-Royce tumbled after it downgraded this year’s forecast.
The blue-chip FTSE 100 shed 0.8%, with energy and banking stocks leading declines. Oil majors BP and Royal Dutch shell were the biggest drags on the index.
The domestically-focused FTSE 250 slipped 0.7%, bringing weekly declines to nearly 3%, after British Prime Minister Boris Johnson said that it was “very, very likely” that trade talks with the European Union would fail and that the UK would leave the bloc at the end of year without a deal.
The FTSE 250 would slide between 6%-10% and UK bank shares would drop 10%-20% with a no-trade deal Brexit, Morgan Stanley strategists said.
London’s benchmark stock indexes have bounced since a coronavirus-driven crash in March, but have lagged their U.S. and European peers as data suggests a much deeper impact on domestic economic growth.
A Reuters poll this month found it will take at least two years for UK GDP to reach pre-pandemic levels.
Source: Saudi Press Agency