By Merryn Somerset Webb – MoneyWeek Magazine (Great Britain) –
John Stepek: The pound has been the most obvious casualty of Brexit so far. Is this a bad thing, and is sterling likely to fall much further?
Roger Bootle: I don’t think it’s a bad thing at all. I just published a pamphlet with John Mills called The Real Sterling Crisis, arguing that a major problem of British economic policy over the last 25 years has been ignoring the exchange rate – the most important price in the economy. This has severely unbalanced our economy. So Brexit marking it down is a heaven-sent opportunity. My big worry is that it will go up again. I’d like to see the government and the Bank of England take steps to prevent that.
Peter Warburton: The foreign-exchange market is a bird with a small brain – it thinks about only one thing at a time. As long as it’s obsessed with sterling, it could weaken further. But that sterling obsession will be overtaken pretty soon – perhaps by the US election. So the slide is unlikely to last, particularly if the Conservative Party conference marked peak “hard” Brexit, and we progressively give up ground from that position.
Andrew Lilico: And UK assets are probably cheap here, even in the more pessimistic Brexit scenarios. Once people stop worrying about the pound falling further, you’ll get an inflow of money.
John: But if a weak pound is key to rebalancing, might the government try to keep it down?
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