Sunday, November 16, 2008

George Osbourne, the pound and Labour's mendacity

In an interview in Saturday's Times, George Osbourne expressed concern that the pound could face a proper sterling crisis, a run on the pound.

In fact the article says:
There is also a more immediate risk. “We are in danger, if the Government is not careful, of having a proper sterling collapse, a run on the pound. The danger of that is that it pushes up long-term interest rates. The more you borrow as government the more you have to sell that debt and the less attractive your currency seems.”
Rather obviously there already has been a run on the pound, in the last four months it has collapsed from a value of $2 to the pound to $1.47, from €1.25 to €1.17 against the Euro (though in January £1 bought you €1.40) and against the Yen we have gone from £1 in July buying 205 Yen to 140 now.

To some extent this all helps our exports, except that no one is importing much right now so it doesn't. What it will do is raise inflation again suddenly forcing interest rates up.

What is worse is that Gordon Brown is looking to borrow even more hideous amounts of money for an electoral bribe. George Osbourne is right to say this will hammer the pound. We will be paying for the last Labour government for years to come. With a bot of luck there will not be another one.

The BBC has been angling on Labour criticism of George Osbourne's comments in such a way as to indicate that they would really like to have the BBC charter withdrawn altogether and be thrown to the free market.

Fraser Nelson has this on the Osbourne row, whilst Adam Boulton has this and John Redwood has this on Labour mendacity.

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