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Pound falls as plug pulled on cross-party talks

The pound sank to a four-month low following the collapse of cross-party Brexit talks and uncertainty over who will replace Theresa May in Downing Street.

Business leaders have reacted with anger and frustration at the failure of the negotiations between the Tories and Labour, with calls for politicians to ditch an upcoming break to get on with ending the deadlock.

On the markets, sterling fell half a cent against the US dollar to its lowest level since January, just above the $1.27 mark.

The CBI is in the early stages of consulting members on executive pay
Image: The head of the CBI has has condemned the 'dismal' failure to make progress

It was also at its lowest point versus the euro since February at just over €1.14.

Eyes have also turned to who will succeed Mrs May, who under pressure, has agreed to set out a timetable for her departure after MPs vote in early June on her EU withdrawal deal – already rejected three times by the Commons.

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Her replacement by a Eurosceptic leader favouring a no-deal scenario, no Brexit or the possibility of a general election and a Labour government would all have implications for the currency.

With the breakdown of the talks, the head of the Confederation of British Industry (CBI) has condemned the "dismal" failure to make progress.

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Carolyn Fairbairn said the economy was paralysed by the continuing Brexit turmoil and told MPs they should scrap the parliamentary recess planned for the end of the month.

MPs and peers are expected to leave Westminster on 23 May and not return until 4 June.

The CBI director-general said: "Another day of failed politics, another dispiriting day for British business.

"Six wasted weeks while uncertainty paralyses our economy.

"The May parliamentary recess should be cancelled and used to agree a deal as soon as possible – whether through indicative votes or the Withdrawal Agreement.

"Business and the country need an urgent resolution to this mess. This is no time for holidays. It's time to get on with it."

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Edwin Morgan of the Institute of Directors, said: "This is a fresh disappointment heaped upon the pile of previous disappointments.
"With a parliamentary deadlock, seeking cross-party consensus was always a worthwhile endeavour – but it makes it all the more frustrating for business leaders to see the talks result in little more than precious time used up.
"We urge the government to confirm their plans immediately and crucially before the recess. It's time to make a decision on the future of this country, we can't live in limbo forever.

"Politicians must remember that we're eating into potential negotiating time. Equally, no-deal, which a clear majority of our members say would negatively impact their firms, is still on the table."

Stephen Phipson, chief executive of the manufacturers' organisation Make UK, warned over the continuing uncertainty.

He said: "Many firms have used all their working capital to build stockpiles of parts and materials and then exhausted lines of credit to pay for the warehousing to keep them in.

"Whilst they face great hardship to keep their businesses afloat they look on with despair as Westminster moves at a snail's pace.

"The consequences of this are almost daily announcements of the great damage being done in terms of lost orders and an evaporation of confidence in the UK as a place to invest."

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