The fall of the pound has been the political event of the week, but is it all bad news? Many thanks to Civitas for allowing us to republish the below essay, an extract from a pamphlet (pdf) about the merits of a low currency and case for keeping the pound at its new competitive levels.
Many people in the market and much of the commentariat are currently concerned with the recent weakness of the pound on the exchanges. They are barking up the wrong tree. The real sterling crisis is that the pound has been too high.
Accordingly, the Brexit-inspired bout of sterling weakness was extremely good news for the British economy. Far from panicking about the lower pound, the UK authorities should be concerning themselves with the question of how they can ensure that the pound continues to trade at a competitive level in the future.
The exchange rate of the pound is vital to the success and health of the UK economy and the fact that it has long been stuck at much too high a level bears much of the responsibility for the economy’s current ills.
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