Sterling plunges on the currency markets. Middle Eastern oil money flees London. A prime minister resigns in mysterious circumstances, and a government clings on to a vanishing majority. Sound familiar? In fact, it is a description of the run-up to the sterling crisis of 1976, which forced the then Labour government to crawl to the IMF for an emergency bailout. But the parallels with today are spooky.
As the catastrophic election result for the Conservative party is digested, sterling is already sinking like a stone. No one has any real idea who will be PM in a few months’ time, whether there will be another election, or who might win if a second vote is held. We are not about to repeat the traumatic experience of 1976; with a fully floating currency, it is unlikely we will have to ask the IMF for help. Even so, the election will create the most serious crisis for the British economy for 41 years.
Brexit was a perfectly plausible option.
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