IN the old days, if the UK stock market was hitting record closing highs on a daily basis this might well reflect great confidence in the country’s economic prospects and its government.

However, while the opening days of 2017 have featured a long run of all-time closing highs for the UK’s FTSE-100 index of leading shares, the reasons for these new heights have been quite the opposite of those in years and decades past.

We should perhaps acknowledge at this stage that the Brexiters could, with some justification, claim credit for the surge in the FTSE-100 index. Yes, the leap in the stock market has a fair deal to do with last June’s vote to leave the European Union. But it is definitely not a rise they should be celebrating.

Much of the rise in the FTSE-100 has been driven by the extreme weakness of sterling, which on Wednesday recorded its worst levels against the dollar since the “flash crash” last October by plunging towards the $1.20 mark. Sterling has since clawed its way off its worst levels but only because of dollar weakness following US President-elect Donald Trump’s press conference.

The weakness of the pound, which was trading close to $1.50 on June 23 ahead of the EU referendum result, means the overseas earnings of the many international companies listed in London are worth more in sterling terms. This currency translation effect provides an automatic boost to share prices.

And, in case it had escaped anyone’s notice, the pound’s weakness has arisen from the UK’s much-diminished economic prospects in the wake of last June’s Brexit vote. No two ways about it. And from the attendant shambles in the UK Government. The pound has also been weighed down by the even looser monetary policy implemented by the Bank of England to try to mitigate the Brexit vote damage, with these emergency measures having also boosted the stock market directly.

Sterling has come under particular pressure this week because Prime Minister Theresa May has again, as she did back in October at a jingoistic and tub-thumping Conservative Party conference, made remarks that have fuelled fears of “hard Brexit”.

It is all a bit reminiscent of hit Hollywood movie Groundhog Day, starring Bill Murray.

Mrs May has made it plain this week she does not “accept” the terms “hard” and “soft” Brexit. Her likes and dislikes when it comes to terminology are entirely irrelevant.

The fact of the matter is her comments on Sunday on Brexit have been taken in financial markets as another sign the UK Government wants to prioritise restricting immigration over single market access.

On Sunday, Mrs May talked about being able to control immigration, and signalled she did not want to keep “bits” of EU membership.

Immigration, which plays an important part in the success of businesses and the economy, has been very much in focus again this week.

Amid the lamentable finger-pointing at immigrants by some in the UK, Labour leader Jeremy Corbyn addressed the issue. Ubiquitous previews of Mr Corbyn’s speech revealed he would say Labour was “not wedded to freedom of movement” for EU citizens. He did but, crucially, he added: “But I don’t want that to be misinterpreted, nor do we rule it out.”

The Labour leader was accused of causing confusion, although it was good to see things toned down from the previewed version. However, confusion or not, the latest comments from both Mrs May and Mr Corbyn appear to signal a desire to woo those opposed to immigration.

And the UK Government’s focus on immigration, in the current febrile environment, surely does not bode well for continued single market access. It would seem likely to exasperate further our long-suffering EU partners as Mrs May prepares to trigger Article 50 by March and start a formal exit process that is meant to take two years.

Mrs May will be well aware, from the reaction of sterling to her weekend comments, that there is plenty of doubt in financial markets about the Conservative Government’s ability to negotiate a Brexit deal that will mitigate the inevitable economic damage.

Given the pound dived on her October comments and again this week, you wonder what is going to happen when she actually gets around to the serious business of triggering Article 50.

Against this backdrop, the Federation of Small Businesses’ latest survey made interesting reading this week.

It showed Scotland and London, which both voted against Brexit, were the only areas of the UK in which confidence among small businesses fell in the latest quarter.

Colin Borland, head of external affairs for the FSB in Scotland, said: “Of course correlation is not causation, but it is interesting that the other area of the UK where confidence has dipped is London. So perhaps some of this reflects greater worries from Scottish business owners about the impact of leaving the EU on their operations.”

From speaking to Scottish business leaders, it appears there remains significant dismay over Brexit.

And Stuart Patrick, chief executive of Glasgow Chamber of Commerce, put it well last month when he declared: “We will…have to have a debate over the issues, probably without having any more knowledge at the end of 2017 than we did when it started. I hope that is not the case but I fear it will be.”

It has to be said Mrs May and her Cabinet have done absolutely nothing to dispel this notion. They might try to paint a picture that they are just playing their cards close to their chests.

But sterling’s tumble, and the FTSE-100’s surge, suggest financial markets are not buying this and are rather taking the view that there is a lack of a game plan, and that Brexit is going to be very bad for the UK economy.