The pound has fallen to its lowest level in 10 million years and it is all Brexit’s fault, or so they will have you believe. In truth, the Brexit has a small short term part but the majority is down to economic mismanagement over the last 30 years.
On June the 24th, it became clear that the UK had voted to ditch failing EU. What followed was a predicted immediate drop in the value of the pound against global currencies. This was perfectly normal and expected, as the UK hadn’t actually left the EU and it would be a long time until it did leave, it was still sort of unfounded from the point of view as anything other than being speculative.
In the 2 months following the vote, the pound bounced around at $1.30 - $1.32 to the £. Then something else happened – The Tory party conference.
In September the Chancellor took to the stage and told the conference that he was about to ditch the myth of austerity. He said that they would no longer be running a surplus towards the end of this Parliament.
That is what sent the pound dropping to $1.20, not Brexit. The fact that the Government is going to try and borrow more and more money is what is concerning the markets. Our finances as a country are in one hell of a mess and not getting better anytime soon.
The previous Chancellor George Osborne should be seen as the luckiest Chancellor in history. He managed to get the sack over something as small as a reshuffle before the brown stuff hit the fan in the coming years. We were looking forward to seeing him explain why he didn’t hit any of his targets, or indeed getting anywhere close to them.
In our opinion the pound will come flying back next year (2017), we are due to find a little bit of inflation because of the drop in the pound’s value. Inflation is good for the economy because it decreases the real terms value of the debt.
Add to that that the Euro is in big trouble and will collapse in the next few years will also send the value of Sterling soaring.
Don’t listen to the BBC scaremongering, everything is perfectly normal and little to do with Brexit. If you are going to worry, start to worry about the size of the Government’s deficit.