Austin Mitchell On The Pound's Fall.

THE pound’s going down. Good. We Britons have always been bemused by fluctuations in the value of the pound. ADVERTISING inRead invented by Teads On those rare occasions that the pound rises, government claims it as a consequence of their brilliant policies. When it goes down, as it is now, it is seen as a national humiliation and blamed on governmental failures. The City of London has always wanted a high and stable exchange rate to acquire assets and manipulate money overseas. Governments tend to share this view and usually struggle to avoid devaluation, as Harold Wilson did by two economic freezes which ruined his government and his plans for growth in the 1960s. Now the recalcitrant Remainers claim that the present fall is yet another dire consequence of Brexit and a symptom of worse to come. All nonsense. The exchange rate isn’t a national symbol but a market-clearing mechanism. A competitive rate is not whatever rate governments want it to be, but the rate which allows Britain to clear the market and balance its books in conditions of rising growth and full employment. Anything else damages both. Too high and unemployment rises and the trade balance suffers. Too low and the economy overheats, though that’s a rare condition in Britain. Our penchant is for a high, and usually over-high, rate. It follows from this that the current fall, which began well before Brexit and has been accelerated by the loss of confidence after it, is a necessary and inevitable consequence of Britain’s inability to pay its way in the world.
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