Sunday, December 14, 2008

The Pound to slump to low against the Euro

Well, all last week the pound plummeted to new depths against the Euro, and will do so again this week. It finished the week at £1 to €1.11880 (In my last article on the subject I made a typo :( )

You have to wonder what low it will hit next week. People travelling abroad are already getting less that €1 to the pound (see this on the BBC). Will it hit as low as €1.05 or even parity?

So what would Gordon Brown say about it? Well, in 1995 he said:
A weak currency is the sign of a weak economy, which is the sign of a weak government
How true. (Hat tip to Iain Dale for the quote)

Of course Yvette Cooper, Chief secretary to the Treasury has said that this government does not watch what is happening to the currency and instead looks to keep inflation under control claiming that they have done well over the last 11 years.

The reality is that this government had kept the wrong measure of inflation "under control" and that was not in fact the government but the Monetary Policy Committee of the Bank of England. Had this government (or indeed the MPC) kept the right inflation under control we would not be in this mess.

No comments: