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Sterling sinks on Brexit fears

Monday, February 22, 2016 - 01:41

Sterling sank against the dollar as the defection of London Mayor Boris Johnson to the ''Brexit'' camp adds to concerns that a British departure from the European Union is a real risk. As Sonia Legg reports half of Britain's top companies have also reportedly signed a letter calling for Britain to stay put.

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His father worked for the European Commission but Boris Johnson wants Britain to leave the EU. The decision by London's Mayor rattled investors, with the pound hitting a seven year low. Britain's Prime Minister favours staying in - and he now has four months to convince voters. (SOUNDBITE) (English) LONDONER, BECKY (DIDN'T WANT TO GIVE LAST NAME), SAYING: "We're just better off on our own. I think, you know, we've been an island for a long time and I don't think we need to rely on other people." (SOUNDBITE) (English) LONDONER, CAROLINA MARINE, SAYING: "I think there are so many benefits and we are now in a very globalised society and we are better together than going away." Britain's financial sector is a big employer in London. And a survey of 672 company directors suggests 60 percent plan to vote in favour of keeping Britain in the EU. 31 percent say they'll vote against. Matthew Beesley is from Henderson Global Investors. (SOUNDBITE) (English) HENDERSON GLOBAL INVESTORS, HEAD OF GLOBAL EQUITIES, MATTHEW BEESLEY, SAYING: "It would clearly be very negative from a UK GDP perspective both in terms of the sudden shock but also a more substantial longer term impact as companies re-orientate themselves towards a new settlement. But there is also a risk to the broader euro zone as well." Britain pays around a billion euros a year to the EU - money other countries may have to find if it left. And that's not all says Robert Halver from Germany's Baader Bank. (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "London's banking industry is the most global there is. Europe needs the British because they are always promoting the market economy and reforms. With more debt and financing from the ECB Europe cannot survive in the long run." The stakes are certainly high And Amercia's Citi bank now sees the chances of a Brexit at between 30 and 40 percent.