By Julia Zorthian
July 7, 2016

A leading economist warned that the pound sterling could slump to the same value as the dollar if lawmakers cannot quickly establish a post-Brexit financial arrangement that involves free trade with the European Union.

Mohamed El-Erian, the chief economic adviser to insurance company Allianz, told Reuters that lawmakers need to come up with a sound Plan B — and they need to do it fast. He made the comments as sterling fell to $1.28 on Wednesday, its lowest point in 30 years. It had been $1.50 on June 23, the day of the referendum.

“After the Brexit referendum, the U.K. has to urgently get its political act together,” El-Erian told Reuters, “‘Plan B’ depends on the politicians in London and across the Channel, but so far they have not stepped up to their economic governance responsibilities.”

International Monetary Fund head Christine Lagarde also discussed the dangers of not moving ahead swiftly in the talks with Brussels.

“Do we have a forecast and scenario with prolonged uncertainty, total lack of clarity, no triggering of Article 50, things staying in limbo for a long period of time?” Lagarde said to the Financial Times. “No. We don’t have that. We doubt that it would be sustainable politically, geopolitically.”

Write to Julia Zorthian at julia.zorthian@time.com.

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